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SFA reaction to Supplementary Budget 2009


· Supplementary Budget 2009 should restore confidence to the economy
· Small business critical of paltry Enterprise Stabilisation Fund of €100mn
· Heavy tax on income should be reduced in subsequent budgets by broadening of the tax base


The Small Firms Association has broadly welcomed today’s Budget, as being important in restoring confidence to the economy. “In particular, the clear commitment by the Minister for Finance to tackling the fiscal imbalance in the economy should send the right messages to the international markets, and give businesses the confidence to reconsider investment decisions that have been postponed due to the uncertainty that has prevailed over the last number of months”, commented SFA Chairman, Dr Aidan O’Boyle. “We would have preferred to see the balance tilt to greater expenditure cuts rather than increases in taxation, but welcome the Minister’s clear commitment to retilt this balance in future budgets.”

However, the SFA Chairman was critical of the “paltry €100mn over 2 years Enterprise Stabilisation Fund”, which he said “would do little to support struggling small businesses in real terms”. The SFA had been seeking a €1bn range of supports for small businesses in 2009 to help businesses maintain jobs, improve their management development and innovation capacities. Dr O’Boyle commented: “It is much more sensible to try to retain people in jobs that exist rather than retrain people who have lost jobs, for jobs that do not and have no prospect of existing in the short-term.” The SFA has serious concerns that the €128mn which is being reallocated to support 25,000 people in job activation supports, will be moved from the current funding for companies to upskill their employees to make them more competitive, which Dr O’Boyle said “would be a serious policy mistake” and the SFA is seeking clarification from the Tanaiste in this regard.

Whilst the SFA chairman accepted the fact that practically speaking, raising taxes on income, including the income levy, PRSI ceiling and health levies, is the only way in the short-term to raise sufficient revenue to plug the whole in the public finances, he stated that he “fully expects that the burden of taxation will be moved from labour and capital to the less economically damaging property tax measures proposed in the next budget”. “The broadening of the tax base in the next number of budgets is absolutely essential”, he said.

In conclusion, Dr O’Boyle welcomed the announcement of the establishment of the National Asset Management Agency to take the banking sector’s toxic debts, in the anticipation that this will mean a return to “business as usual” lending by the banks to small firms who desperately need support, in particular on working capital.


Ends


Issued by: Patricia Callan, SFA Director, Tel: 01-6051602 or 087-6999345

For interviews contact: Dr Aidan O’Boyle, Chairman, Small Firms Association, Tel: 087-2733541
Tuesday, 7 April 2009

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