Budget 2016 must deliver for small businesses

Friday, 9 October 2015

Statement by Patricia Callan, Director, Small Firms Association
  • Government must not create upward pressure on labour costs
  • Housing shortages must be addressed to make Ireland a great place to live and work
  • Introduce a tax credit for childcare costs

With just days remaining until the announcement of Budget 2016, Patricia Callan, Director of the Small Firms Association (SFA), said “It is critical that Budget 2016 delivers real benefit for small businesses. We welcome the comments made by many Ministers that steps will be taken to stop the discrimination in the tax system against self-employed and proprietary Directors and to make Ireland a better country for entrepreneurship; however it is critical that any commitments in the Budget are meaningful. This includes a move to reduce capital gains tax from the current penal rate of 33% to 10% for entrepreneurs".

Callan commented: "The economic situation continues to improve, but it is vital that the Government uses Budget 2016 to ensure that all counties and sectors are benefitting from the recovery and that the ground is laid for long-term, sustainable and job-rich growth. Government must take decisive action on social issues such as housing and childcare which have a direct impact on wage expectations and thus on small business competitiveness."

Specifically the SFA in its Pre-Budget Submission has called for a reduced rate of VAT of 9% on the construction of residential property for two years to relieve the supply shortages without further increasing house prices. It is also seeking the introduction of a childcare tax credit. "This would support working parents and increase participation rates, in particular of females", argued Callan. "Individual spending related to government policy (housing, childcare, health, education, transport and energy) amounts to 69% of the total Minimum Essential Standard of Living (MESL) cost in the Living Wage Technical Group calculations. If decisive action is taken to reduce these costs for people, then the minimum wage would be the living wage."

Callan continued "if the Government is relying on small businesses to create the next 100,000 jobs it is targeting, then the cost of employment must be contained. The expected announcement on Budget Day by the Government of its acceptance of the 50c (6%) proposed increase in the National Minimum Wage rate by the Low Pay Commission is concerning. This must be accompanied, as promised by An Taoiseach, by a reduction in employer PRSI costs to compensate them, along with changes to the employee PRSI system. Many small businesses around the country in various domestically trading sectors still have low profitability and no ability to pass on such labour cost increases in their own prices to the market. This means they have no choice but to reduce hours, lay people off or delay recruitment, if PRSI costs are not cut."

“Budget 2016 presents an opportunity to improve the business environment and encourage job creation. The Irish small business community urges the Government to seize this opportunity,” concluded Callan.


A full copy of the SFA’s pre-Budget 2016 submission is on www.sfa.ie

For further queries and interviews, please contact Patricia Callan, on tel: 01-6051602 / 087-6999345, email: patricia.callan@sfa.ie or Tweet: @SFA_Irl