Capital expenditure must take priority over increasing current expenditure
The Government must act prudently in challenging times
ISME, the Irish SME Association (October 9th) on the eve of Budget 2018 reiterates its call for Government to adapt a budget that is pro-jobs, and pro-enterprise. The Association wants the Government to pass a budget that focuses on sustainable growth for everyone.
Commenting on this ISME CEO, Neil McDonnell said “Reality needs to set in at Leinster House. Tomorrow’s budget cannot be one that yields to populist demands. Budget 2018 must provide sustainable growth for all, not just a few. Investment in our infrastructure and housing, effective training programmes that generate upskilling and new employment, are all key areas government must invest in.”
Our priorities for budget 2018 are:
Reduction in the punitive 23% VAT rate to 21%. Preferential VAT rates should be used to encourage the uptake of green, low-carbon technologies for transportation, lighting and heating.
Spending on infrastructure needs to increase. The State needs to prioritise water provision, the National Broadband plan, the completion of the M20 between Cork and Limerick, the rapid provision of affordable housing, and improved public transport. We should target infrastructure at 4% of GNI*. Capital expenditure must take priority over increasing current expenditure. We should make more use of PPP finance to facilitate this without breaching our fiscal targets.
Our Capital Gains Tax (CGT) and Inheritance Tax regimes must be updated, both to increase yield, and to encourage more intensive use of assets.
Our business start-up and entrepreneurial reliefs must be updated, to encourage the formation of new businesses, and to encourage entrepreneurs to scale those businesses before sale.
Our further education and training regime is not consistent with activating a bigger workforce, or training the unskilled. Ireland’s performance on NEETs (not in Employment, Education or Training) is markedly worse than the OECD average. We must divert spending from non-performing programs towards those which will expand our workforce in size, learning and expertise.
“While we face many challenges in 2018,one issue that unites all political and economic strands is that of affordable housing. The costs of rent and purchase of even the most basic of family accommodation have become prohibitive, and have led to severe upward pressure on wages. Government must address this for all involved”.