Friday, October 04 14:33:48
On Tuesday, 15th October, the Minister for Finance Michael Noonan TD delivers Ireland's 7th austerity budget and the money will have to come from somewhere.
There appears to be an agreed budgetary adjustment of around E3bn, so where will the Minister for Finance find it?
"There is a little bit of flexibility and we'll work in that space to bring in the best budget possible," Mr Noonan said. "However, in order to boost Ireland's economy, we need job creation and we need to incentivise entrepreneurs and be able to attract foreign investment and talent."
Over the past 7 years, we have lived with a bigger tax burden, including the USC, Property tax, and various tax rate increases.
Fiona Murphy, Taxation Director with Russell Brennan Keane says "our 12.5pc Corporate tax rate is not for changing and our VAT and Marginal Income Tax rates are already at an unsustainable level. Unfortunately though, it is likely that there will be a some increased tax take, perhaps not in a tax rate itself, but more likely in the PRSI rate. Any thoughts of increasing taxes on employment and labour further will be counterproductive."
''The Commission for Taxation made various recommendations a number of years back which included a number of Capital tax proposals, which, in the main, have not been implemented''.
Whilst the Capital Gains Tax and Capital Acquisitions Tax rates have increased from 20pc gradually to 33pc over the last number of years, further increases may emerge in this budget, she said. Ms Murphy saidd that history tells us that increasing the CGT rate is a disincentive to activity in sell and buy transactions, so perhaps the CAT rate for gifts, inheritances and transfer of business assets, is where some of the extra budget revenue will be found, along with restricting the many capital taxes reliefs that exist.
"Rumours about change in these reliefs arise every year but perhaps they will fail to materialise again in order to protect family businesses in particular, where family business assets are being passed on to the next generation. Another targeted source of revenue may be a form of increased taxation on investments either some kind of capital taxes when passing them on or increased income tax rates on passive income from investments."
"Wherever the Minister finds more tax revenue, the tax taken out will cause hardship to many. The overriding principle for the Minister should be to introduce measures to boost our economy, and not tax people out of existence."
Russell Brennan Keane, Ulster Bank and Athlone Chamber are holding a Budget Briefing on Wednesday morning, 16th October 2013 at the Sheraton Athlone Hotel to analyse the Minister's proposals and provide timely advice for businesses on the implications.