Thursday, 25 July 2013
- No Increases on employment costs
- Introduction of an Equitable Local Property Tax
- Tax Supports for Small Firms Investment
- Establishment of a State Investment Bank
“The introduction of a more equitable local property tax, where an individual will not pay tax on monies which they are already paying interest on, will release additional disposal income to drive consumer spend.”AJ Noonan, Chairman, SFA.
The Small Firms Association in its pre Budget meeting with the Minister for Finance called on the Minister not to place any increases on the cost of employment; support SME investment and job creation; introduce a State backed investment bank and ensure that Budget 2014 delivers on the vital need to restore consumer confidence.
SFA Chairman, AJ Noonan stated that the key to future success is investment and resulting growth. He called for Budget 2014 to place small businesses at the heart of economic policy. “Small business are the drivers of innovation and a permanent source of prosperity, employment and economic progress.”
“Despite the horrendous impact in the years since 2008, there are still 200,000 small firms in Ireland, employing 655,000 people and 12,000 new businesses being set up each year. Entrepreneurship is alive and well, but must be nurtured and developed with a renewed focus from both agencies and Government.”
Mr Noonan set out four key priorities for Budget 2014:
No Increase on Employment Costs: Government measures taken since 2010 have already added over €660million per annum to labour costs, through employer PRSI changes, pensions levy and most recently the changes to the redundancy rebate. Any proposals to introduce mandatory sick pay; pension provision or increase employer’s PRSI or the minimum wage, will dramatically increase the cost of employment and will impact jobs.
Support SME Investment: To support investment, Government should allow funds to be released into small business through the introduction of a “roll-over” relief, and reduce capital gains tax. The reduction in the VAT rate to 9% for hospitality and related items and the introduction of a lower employer PRSI rate for low wage workers have been very successful. These measures should be retained.
Establish State Bank: A State backed investment bank should be established that will provide funding for SMEs. This is as per the programme for Government.
Introduction of an Equitable Local Property Tax: In 2014 the LPT will place many households under further financial constraint and impact on consumer spending. The SFA believe a more equitable LPT payment model could be applied and propose that the valuation of a property tax should be based on the property value less the outstanding mortgage.
Mr Noonan said, “the guiding principle is that the individual will not pay tax on monies which they are already paying interest on. This will release additional disposal income to drive consumer spending which has been the key area of weakness in the economy.”
Noonan stated that the Government needs to balance the budget through cuts not tax increases. Government has previously outlined its plan that Budget 2014 will involve €2billion in expenditure cuts and €1.1billion in revenue increases of which €500million will be new measures and €600million will be a carry-over from measures introduced in 2013. “We propose that the €500m of new taxes are not imposed. The economy businesses and workers are taxed enough we cannot have any further employment or business taxes – adjustment must be made by reducing expenditure.”
In conclusion, Noonan called for greater consumer certainty stating that weakness in consumer spending continues to undermine tax revenues and cost jobs. “It is vital that confidence is restored to Irish households and businesses, as when they become more confident about their prospects, economic recovery will gain greater momentum, especially at the domestic economy level.”
To see a copy of the SFA Pre-Budget Submission 2014 please click here.
For further comment, please contact A J Noonan, SFA Chairman at Tel: 086-259 2610