For some time now, the Print & Packaging Forum has been lobbying government to change policies which would have an immediate beneficial impact on the sector. With this in mind, the Forum recently made a presentation to the Fianna Fáil Parliamentary Party.
The Forum is putting considerable pressure on all political parties for the formation of a Printing Industry Task force and significant progress has been made in this regard.
The following is a transcript of that presentation:
Summary of Print Industry Meeting
20th April 2010 – Red Cow Hotel, Dublin.
The above meeting was held under the auspices of the Print & Packaging Forum on the 20th April and nearly 100 people representing Printing Firms from all over the country were in attendance.
The Aim of the meeting was to commence a process which would achieve the following.
Agreed Action Points
Action since meeting on the 20th April
Items on this submission will include:
A meeting of the steering committee will be held in the coming week in connection with the above.
For some time I have been seeking an official statement clarifying the circumstances in which the State, Local Authorities and bodies covered by Public Law should account for VAT. The organisations covered by the following clarification include Government Departments, State Sponsored Bodies, An Garda Siochana, the Defence Forces, the Health Service Executive, Public Hospitals, Enterprise Boards, Local Authorities and Educational Establishments ( Universities, Institutes of Technology,Schools,and VEC’s) .
The following clarification has been issued by Mr Vincent Campbell Director National Procurement Service.
” Procurement and the treatment of Value Added Tax (VAT) The National Procurement Service (NPS) has recently had a number of queries relating to the application of VAT and offers the following guidelines. In all instances tenders must be required to submit prices exclusive of VAT. In all instances tenders must be assessed on the basis of prices exclusive of VAT.
In general, this means that either, 1. The supplier in his/her Member State charges their VAT rate, or 2. The customer /recipient self-accounts for Irish VAT.”
The above information should be read in conjunction with the following: General Procurement Guideline – Competitive Process and Revenue Value-Added Tax Information Leaflets, entitled ” State Procurement ” and ”Place of Supply for Services” which are available on the Revenue website at www.revenue.ie
With effect from 8th December 2009 the Government has extended the Employment Subsidy Scheme to exporting and non-exporting companies from all sectors of the economy that employ more than 10 employees. The Employment Subsidy Scheme is designed to support the maintenance of vulnerable jobs and prevent people from being made redundant.
The scheme will provide two bands of subsidy. Under the first band employees must work an average of 35 hours or more per week for which you could receive a subsidy of €9,100 paid over a twelve month period for each subsidised job. Under the second band employees must work an average of 21 or more hours per week but less than 35 hours a week for which you could receive €6,370 over a twelve month period for each subsidised job.
Applications must be made online and you are advised to register immediately. Email Address ess@enterprise-ireland.com
The deadline for applications is 23rd December 2009.
My understanding was that the GAA was founded to support and promote all things Irish.
It is therefore rather disappointing to discover that the book to celebrate its 125th anniversary (The GAA – A Peoples History) was printed in Italy. It is also disappointing that it’s annual book of photographs, A Season of Sunday’s, was also printed in Italy.
Against this backdrop I conducted a survey of 40 books about the GAA, which are currently available in the bookshops. The following are my findings.
Only 5 of the books were printed in Ireland while a staggering 22 different titles were printed in the UK. Of the balance 3 were printed in Italy, 3 in Spain, 3 in Malta, 1 in Denmark, while a further 3 books have an EU imprint on them.
In my opinion the combined value of the contract to print all of the above publications is in the excess of €600k.
In addition to the significant number of imported GAA Books the organisation annually prints it’s 1.7 million Match Tickets for Croke Park at Weldon, Williams and Lick in the USA.
All of the above contracts could have been produced in Ireland by the tax payers who have made such considerable contributions to the development of the Stadium at Croke Park.
Given that a significant number of rank and file members and supporters of the GAA are unemployed printers it is my intention to highlight this matter where appropriate.
Following meetings I have had with the Revenue Commissioners and the Dept of Finance, I am satisfied that the authorities will respond to our Industries demands for tighter tax controls on Vat exempt organisations.
They have accepted that our Industry has been disadvantaged as a result of their failure to enforce Vat regulations. These regulations clearly stipulate that VAT Exempt bodies must Self Declare and pay Irish VAT rates on all imported products. Failure to do so is a breach of the VAT regulations and constitutes serious tax evasion. The Authorities will be in contact with all VAT Exempt organisations in the coming weeks and they will clarify the rules and ensure that there is no ambiguity in this regard. As a direct consequence the VAT loophole will be closed and our Industry will be treated equitably. It is essential that we police this matter closely and highlight questionably purchasing practices.
I hope to be able to convince the Authorities to alter the method of evaluating tenders and introduce a position where all future quotations are supplied Exclusive of VAT. Since Vat can never be used as a differentiator this issue should never arise and any questions relating to the payment of VAT are highly inappropriate.
The following statistics from the USA make for interesting reading.
The sluggish economy and slowing print markets continued to pull down printers’ profitability over the year 2008. Profits as a percent of sales average 1.5% for all printers participating in the 2009-10 Ratios Survey. This is a decrease of 1.6% from last year’s average of 3.1% and the first consecutive decrease since 2001. At this rate the industry will earn approximately $2.5 billion in total profits over the course of the year, down significantly from the prior year’s approximate $5.4 billion in total profits. The profit leaders (printers in the top 25% of profitability) saw their profits drop slightly over the year, decreasing to 9.4% the previous year. For all printers the average profit of 1.5% approximately equals the rate earned in 2003, the year after the bottom of the last recession. In 2009 materials accounted for the largest single cost category for the typical U.S. printer, approximately 35.1% of sales. Paper alone consumed more than one-in-five sales dollars last year. Other major costs incurred by printers last year included factory payroll (25.3% of sales), factory expenses (17.6% of sales), administrative expenses (9.9% of sales), and selling expenses (8.1% of sales). Total materials expenses increased from 35.0% of sales in the 2008 study to 35.1% of sales in the 2009 survey. Printers also spent more on factory expenses according to the 2009 survey, with increased direct wage costs (15.3% of sales in 2008 vs. 15.7% in 2009) constituting most of the increase. Selling expenses in 2009 increased from 9.0% in 2008 compared to 9.2% of sales in 2009, at the same time administrative expenses increased from 9.7% of sales in the 2008 study to 10.2% percent of sales in the 2009 study. Sales per employee for all printers increased by less than 1.0% in 2009 to $146,960 (up from $146,247 in 2008). Profit leaders, as always, had significantly higher productivity rates than all printers. But in contrast to the gains in Productivity Measures attained this year in the all firms category, profit leaders experienced decreases in all four productivity measures (sales per employee, sales per factory employee, value added per employee, and value added per factory employee), compared to the numbers for the year 2007.
Printers use the Ratios reports to evaluate their performance against industry profit leaders.
Over the period since the end of the 1950s industrial policy has evolved around two main obsessions, the encouragement of foreign direct investment and the focus on high tech development. Both of these obsessions may be to the detriment of the long term stability and advancement of the Irish economy. This is not to say that policies and programmes aimed at supporting these twin aims are inappropriate; however, concentrating too intensely on them, without adequately realising the opportunity costs – in other words blinding obsession – may have harmed the long term prospects of the economy.
Counter-factual analysis is fraught with dangers but it is reasonable to ask – though probably impossible to answer – what the consequences would have been if even 20 percent of the total cost of encouraging foreign direct investment (FDI) had been spent, instead, on various ways of incentivising the development of indigenous firms. As the recently-appointed chair of the Print and Packaging Forum (http://printpackforum.wordpress.com/) I have been made sharply aware of the disadvantages under which this so-called low-tech, indigenous sector labours.
The Forum (through its Director, Gerry Andrews) has been struggling to achieve parity for Irish firms with foreign suppliers in relation to VAT and procurement. In addition, excellent ideas for – cost neutral! – training programmes to upgrade skills of sector workers on three-day weeks have been proposed. The printpackforum website provides evidence of the months and years of knocking on doors, of approaches to Ministers, of presentations to the Joint Oireachtas Committee on Enterprise, Trade and Employment that it takes before any changes are introduced. The changes requested are not irrational, protectionist retrogressing to the 1930s; they are reasonable adjustments to reduce the discrimination against indigenous firms.
The demands of the Forum – representing some 17,000 workers – are met by delays, inflexibility, and inertia. The same demands, made by a multinational considering establishing a subsidiary in Ireland to employ only 500 workers, would be responded to by Government departments, the Revenue Commissioners, FÁS and other agencies, with alacrity, agility, flexibility and dynamism.
Given that the USA is going to make transfer pricing more difficult, and given the ongoing pressures within the EU to harmonise corporate profit tax rates, Ireland’s fiscal attractiveness as a location for FDI is likely to diminish. We should level the playing field for indigenous firms now, before it’s too late.
The launch of the 10 Step Guide to smarter procurement represents the culmination of a years extensive lobbying by the Print & Packaging Forum. Speaking at the launch the Taniste Mary Coughlan stated that the 10 Step Guide was aimed at officials engaged in procurement activity across the public sector. She said that it included practical steps that would encourage innovation in the provision of goods and services and increase SME access to public sector contracts. This initiative is a response to the Forums call for a level playing field for all companies wishing to participate in public tendering and will result in a greater access for SME’s to public sector contracts. The Tainiste stated that the public sector is a particularly important market for small businesses and stated that the removal of obsticals and boosting the involvement of SME’s was a key priority for her . She acknowledged that by increasing the level of SME’s bidding for public contracts the State will ultimately achieve greater value for money.
This was demonstrated recently by the tendering process used for awarding the Lisbon Treaty contracts. Two paper suppliers, a printer and two personalisation firms were successful in winning components of this lucrative contract which resulted in better value for the state and the retention of work by the Irish Printing Industry. The manufacturing elements of this contract could not have been handled by any one of the companies involved. A Win Win scenario was achieved, within procurement legislation, by unbundling the contract and applying the procurement system that has been advocated by the Forum for some time. I hope that this will be the first of many such successes and that the sector will gain as a result of the new changes to the Irish procurement regulations.
