Budget a First Step to Kick-Start Economy

ISME Press Release Regarding Budget

  • ISME lobbying successful against mandatory sick pay.
  • Disappointment with abolition of Redundancy Rebate.
  • SME incentives welcomed as initial step.

ISME, the Irish Small & Medium Enterprises Association, gave a guarded welcome to the new incentives introduced in today’s Budget (Wednesday 5th December) to assist smaller enterprises to develop and grow. The Association described the Budget as a genuine effort to address the environment in which we work and an opportunity to recognize the potential of small businesses and introduce sufficient stimulus measures that will assist them in maintaining or increasing employment and remain competitive.
The Association also welcomed the changes in the start-up corporation tax, cash receipts for VAT and the doubling of the R& D credit, together with the foreign earnings deduction. For a small open economy specifically relying on road transport, the decision to introduce a diesel rebate for haulage contractors is overdue and most welcome.

Commenting on the Budget, ISME Chief Executive Mark Fielding stated “This Budget, while necessarily harsh, has taken the first steps to kick-start the economy. While tough measures are required to balance the day to day books, a much more strategic approach is needed to address the underlying bank-induced debt, the totally unaffordable public sector pension bill and the inappropriate union-dominated structure of the public sector.”
The decision to scrap the much needed redundancy rebate altogether means that the cost of redundancy has risen by a staggering 150% in a year, negatively impacting on those businesses already hardest hit. With the number of redundancies expected to increase it would have made more economic sense to ease the cost of labour for those vulnerable businesses.
While acknowledging the difficult budgetary decisions faced by the Government, the cuts in private sector pension reliefs is a mistake, which will put further pressure on employers’ wage costs and will reduce the level of retirement savings. The cuts will be particularly hard on the self-employed who normally do not provide for their pensions until late in life.
The Association’s hard lobbying on the Sick Pay issue has been successful with the spotlight placed firmly on the public sector shortcomings and we have achieved our objective of no mandatory scheme for the private sector.
However the scrapping of the €127 weekly exemption from PRSI will cost each employee an extra €261 per annum and will undoubtedly generate upward pressure on wage costs.
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 social welfare. It is now hoped that more emphasis will be placed on getting social welfare recipients back to work.
“The priority for the Government is to stabilise the public finances and ensure that the economy is not overburdened by exchequer deficits to an extent that will cause irreparable damage for years to come. Today’s Budget has taken the first steps in the growth strategy by incentivizing SMEs. Now the Government must continue with policies that will underpin competitiveness, support enterprise and instill confidence, both domestically and internationally, in an economy that has the potential to grow,” concluded Fielding.

ISME, Wednesday 5th December 2012.

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