ISME, the Irish Small & Medium Enterprises Association, has compiled a score card on the main issues impacting the SME sector and compared our pre-budget submission with the actualities of Budget 2017.The Association welcomes some of the measures but highlights the urgent need to introduce pay parity and greater protection for the Self-Employed.
Corporation Tax: The Association welcomed the retention of the 12.5% corporation tax rate. Now more than ever Ireland needs to remain competitive, attractive and open to Foreign Direct Investment. The Association scores the Government 5/5.
Entrepreneurship: The Association welcomes some of the measures introduced such as the increase in the Earned Income Tax Credit but highlights that the Government is falling short on its commitment to increase this to €1,100. If the Government is focused on reducing the live register it must make the environment more entrepreneurial friendly. The Association welcomes the retention of SURE (Start-up Relief for Entrepreneurs) and the Foreign Earnings Deduction improvement (40 days to 30 days), but the Associations feels more could be done. The reduction in the Capital Gains Tax rate under entrepreneur’s relief from 20% to 10% is very welcome and something ISME long campaigned for. However the retention of the cap at €1m needs to be increased to the same levels as the UK. The Association marks the Government 20/50.
Remuneration: One of the declared aims of this Administration is to ‘make work pay’. It is generally accepted that the threshold at which the marginal rate of tax kicks in is too low and is acting as a disincentive to work. The retention of the unfair 3% USC charge for self-employed workers earning over €100,000 is a pity and inequitable. The Association marks the Government 3/10.
Access to Credit: ISME requested that a set of regulations for Irish Peer to Peer lending (P2P) be created and implemented as soon as possible. Its success is already well noted in the United Kingdom. The new affordable credit scheme being rolled out by the SBCI for farmers should also be extended to all SME’s. The Association highlights its disappointment in the Government’s failure to do so. The Association gave the Government 2/10.
VAT: The Association called on the Government to reduce the highest rate of VAT from 23% to 21% to boost the domestic economy, it failed to do so. Retention of the 9% VAT rate on Tourism is welcomed, as it has acted as an important catalyst in driving and boosting tourism numbers. The Association scores the Government 6/10.
Rebooting the Domestic Economy: The Association welcome some of the measures to reboot the economy. Investment in childcare through direct subsidies to providers will have a positive impact on female participation in the work place. We welcome the retention of the Housing Renovation Initiative. ISME also welcomes the Government’s decision to commit to the rollout of the national broadband plan, such a tool is vital for SME especially in rural part of Ireland, but noted the current initiative is vague and lacks detail. The Association scores the Government 7/10.
Public Sector Reform: The nature of this Public Sector Commission is very vague and its levels of objectivity are unknown. The Association highlights the need to have a fully independent Public Sector Pay Commission. The Association scores the Government 2/5
Commenting on the figures Eilis Quinlan stated “Increases in social welfare and the minimum wage level always creates upward pressure on wage rates, especially in the SME sector which tends to be labour heavy and this undermines our competitiveness” concluded Quinlan.