SME incentives welcomed but must be promoted and implemented.
Bank levy will be indirectly paid by business.
ISME lobbying on retention of 9% VAT successful.
ISME, the Irish Small & Medium Enterprises Association, gave a cautiouswelcome to the incentives introduced in today’s Budget (Tuesday 15th October) to assist smaller enterprises to develop and grow. The Association 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, 99% of which are SMEs.”
The cuts in social welfare are necessary; 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 Much more must be done to reform the out-of-date system to make it fit-for-purpose in 21st century Ireland, where it is now hoped that more emphasis will be placed on getting social welfare recipients back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.
The change in eligibility for sick pay to 6 days will put extra pressure on already struggling SMEs and their staff. 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 9%, 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.
ISME supports all efforts to improve the cash flow of SMEs. The raising of the qualifying amount, allowing companies to account for VAT on the basis of actual receipts rather than on invoices issued, from €1.25 million to €2 million is welcomed. As was pointed out by ISME, this is a deferral rather than a loss to the exchequer.
The initiative of the ‘Home Renovation tax break’ will help in tackling the black economy, reviving the local construction sector and releasing savings into the economy. However, the ‘floor’ of €5,000 will create difficulties and continue the nixer culture below that level. The Association will lobby to reduce this figure to allow all expenditure up to the ceiling of €30,000.
The bank levy, which may be seen as a slap on the face for our arrogant bailed-out banks, will eventually be paid for by the long-suffering business customer, who has no alternative but to deal with the banks. Until competition is introduced in the Irish banking sector, the reality is that the ‘captive SME’ will pay the bill as was the case with the insurance levy.
It is hoped that the higher DIRT tax will lead to an increase in spending. It would be ideal if the vast amounts on deposit could be used as investment in the wealth creation sector. The increase in tax will discourage savings and have a similar small positive effect on retail sales. However, it will take more than this to instill consumer confidence and get the till ringing in Irish shops.
Once again the Minister has chosen to ignore the injustice to company directors and owner managers who are still unable to avail of the PAYE tax allowance, despite its blatant discrimination against the wealth creators. The justification for such has long been removed as directors pay their tax under the PAYE system, like any other employee.
“The priority for the Government is to continue the stabilisation of the public finances and ensure that the economy exits the recession, sooner rather than later. Much more must be done to regain our competitiveness and support enterprise, which will achieve the jobs growth long sought after. This budget goes some way in this regard, however the creation of an environment where SMEs can thrive and prosper must be a continuous theme,” concluded Fielding.