Blatant discrimination against self-employed continues.
Small income tax gains should ease wage demands.
Focus on Public sector inefficiencies must be a priority.
ISME, Tuesday 14th October 2014.
ISME, the Irish Small & Medium Enterprises Association, at the announcement of Budget 15, criticised the Government for refusing to change the taxation system which discriminates against the self-employed in taxing them at a higher rate. The Association had asked for the change to be introduced incrementally over a number of years to alleviate the cost to the exchequer but the request, once again, has fallen on deaf ears.
Commenting on Budget 2015, ISME CEO, Mark Fielding said: “Not alone are self-employed entrepreneurs refused a tax credit but we also pay income tax at a higher rate than the rest of Irish society. Once again the Finance Minister has chosen to continue the blatant discrimination against self-employed and proprietary directors. So much for encouraging entrepreneurs! So much for last week’s policy document on entrepreneurship! So much for Article 45 of our constitution! So much for ‘making Ireland the best small country in which to do business’!”
“It is clear that Government has attempted to ease the tax burden on workers and these measures should help business manage the growing wage demands and enable increased investment which will hopefully create new jobs and drive consumer spending. The Association welcomes the extension of the start-up corporation tax exemption, the changes in the EII scheme and Foreign Earnings Deduction and the inclusion of rental properties in the Home Renovation Incentive, all of which we lobbied for in our pre-budget submission.
The reduced 9% VAT rate has provided great benefits to the economy and has been seen as one of the major catalysts for the significant revival of our key tourism industry and the corresponding jobs increase over the last two years. Its retention was a no-brainer but welcome.
The private Pensions levy was an unfair expropriation of private sector workers’ savings by a Government with no national pension’s policy. The reduction in the private sector Pension levy is welcome as it was a penal tax on private sector workers to pay for public sector guaranteed pensions.
By adopting a more prudent and entrepreneurial budgetary stance, the Government could have sent a strong signal reinforcing its stated resolve to rectify the remaining weaknesses in the public finances. We are still borrowing €7 billion to keep the country moving, despite the recent modest news from the exchequer figures for the first nine months of the year. The overall level of debt is now five times higher than at the outset of the crisis and is 1.2 times the size of the economy The real danger in this year’s budget is that any slight focus on eliminating public sector inefficiencies will disappear when government departments know additional funding is available. A failure to cut and control public sector spending is now a major threat to recovery.
The budget will be seen as one favouring the political imperative rather than fiscal stabilisation or entrepreneurial incentives. The fact that this is probably the penultimate budget before the next election means that a somewhat populist budget was inevitable. The big question post budget is, will the changes entice the consumer to spend in the nascent recovery and will the public sector unions sabotage the efforts through unreasonable and selfish demands.”