Tuesday, October 15 16:58:45
Business groups today gave a mixed reaction to today's Budget, praising incentives to entrepreneurs but with worry that the banks will pass the levy on to firms.
The Small Firms Association said there were positives and negatives for business. The increase in the lower rate of PRSI and other taxes to the economy will impact detrimentally on the domestic economy, it warned.
SFA Chairman AJ Noonan said that the announcements supporting entrepreneurs and business start-ups "will play a key role in contributing to growth", stating that the roll over relief in capital gains tax for reinvestment; improvements in Employment & Investment Incentive Scheme (EIIS); increasing the cash receipts VAT Threshold and improvements in the R&D tax credits all recognises the potential of small enterprises.
The SFA welcomed the retention of the 9pc VAT rate for hospitality and related items as it has proven to be a very positive initiative and will continue to support this fragile domestic focused sector and jobs within it. However, SFA noted that it will be well paid by increases in excise duties.
AJ Noonan added that the excise duty increases were disappointing, "we already are among the highest excise rates in Europe and these increases will only impact on jobs, squeeze hard pressed consumers and potentially encourage cross board trade."
SFA highlighted that the home improvement scheme will encourage spending in the domestic economy; promote activity in the small business construction sector and address challenges of the hidden economy.
AJ Noonan expressed concerns that continuing to levy pension funds is "just a further money grab of the schemes which are already under serious pressure." He also raised concerns over the proposed bank levy, "Small businesses are already crippled with bank charges, and the real fear is that this cost will be passed back to businesses and result in further increased charges and lack of credit."
ISME said it believes that the decision not to increase income taxes is a wise move as the economy is already experiencing diminishing returns as a consequence of the introduction of USC levies in the previous budgets.
Commenting on the budget, ISME CEO Mark Fielding said: "We in ISME share the Government's agenda to focus on renewed growth and job creation, while at the same time stabilise the domestic financial sector and restore fiscal balance. It is essential that Government understands that Ireland will only be able to revitalise its economy by creating new jobs in the private sector, 99pc of which are SMEs."
The cuts in social welfare are necessary, he said, not just for the cost savings involved but because the higher rates have encouraged individuals to remain on the dole.
"Much more must be done to reform the out-of-date system to make it fit-for-purpose in 21st century Ireland, where it is now hoped that more emphasis will be placed on getting social welfare recipients back into the workforce.2
The change in eligibility for sick pay to 6 days will put extra pressure on already struggling SMEs and their staff, he said.
"Once more we see the not so subtle attempt to transfer of social insurance responsibility from the government to employers. We as employers enter into contracts with our employees and live by these. However as in the budget today the government without any discussion changes these contracts or creates the environment for changing them. This move is making working conditions in the private sector even less attractive than in the public sector, which is contrary to what the Government wishes."
The retention of the temporary VAT rate of 9pc, for which ISME lobbied, will boost the price-sensitive hospitality sector and it is hoped that this will have a positive effect on existing and new jobs in that sector, it said.