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ISME Makes Submission for Budget 2024

Fix VAT rates at 21% and 9% – Establish a Public Spending Commission – Publish debt profile of national debt.

Dublin 26th April 2023 – ISME, the Irish Small & Medium Enterprises Association, representing more than 10,500 direct and thirty-three affiliated SME businesses throughout the Republic of Ireland, employing more than 245,000 people, has today submitted its submission for the Budget 2024 to the Minister for Finance, Michael McGrath TD.

ISME’s priorities for Budget 2024 are:

  • Implement a series of basic tax reforms, including our taxes on property, inheritance, commercial rates and LPT.
  • While spending on infrastructure is now at the levels we have previously sought, we are concerned about value for money.
  • The long-term stability of our social fund spending must be immediately addressed.
  • Our further education and training regime is inconsistent with activating a bigger workforce or training the unskilled. We also acknowledge that our domestic SME base requires extensive training to improve its productivity. This should be incentivised via the tax system like the Teagasc ‘Green Cert.’

Neil McDonnell, Chief Executive, ISME said: “With record tax takes along with upgrades from the ratings agencies, Ireland is currently in a period of financial strength.  But it is essential that we use this period of fiscal stability as a foundation for real and lasting economic and social stability in a sustainable manner. Enterprise deserves reward; employees deserve a fair package, including fair taxation; and the marginalised must be accommodated.

The pension time bomb remains to be addressed and this is major cause for concern. A further area to address is the value for money the state is achieving from suppliers.

Energy, renewable energy and the environment are front and centre of the economy at this time, not only in terms of recent energy inflation, but also in relation to the delivery of carbon emission reduction targets.  As a nation we are not making it easier for ourselves and we highlight several areas to look at, including the heavy cost of deep retrofitting and the potential that exists for offshore wind.”

The submission is produced across ten chapters; and here are the key points from each:

  1. Taxation – lift the standard rate cut-off to the average industrial wage (i.e., lift it by €6.8k); lower CGT to 25%, and to 20% for non-property transactions; 3% USC levy on PAYE earners making more than €100k; fix VAT at 21% & 9%.
  2. Housing – “regularise” the tax affairs of employees in employer-provided accommodation; keep private landlords in the market; exempt from CGT properties that have been on the rental market for more than 10 years.
  3. Green Economy – provide cheap, long-dated, finance for retrofits; increase feed-in tariffs to the grid; 0% VAT for new-build Near-Zero energy housing.
  4. Productivity – Revise supports for post-2016 apprenticeships; conduct a full review of the Employment Permits system and Labour Market Needs Test.
  5. Indigenous Industrial Policy – set up a third State Agency with a remit to scale indigenous SMEs; reform taxes to encourage businesses towards listing or trade sale (to Irish buyers); reintroduce the Statutory Redundancy Rebate; establish a state security-clearance regime to EU-recognised standards within one year.
  6. Public Sector– Establish a Public Service Pay Commission; establish a Public Spending Commission; no collective bargaining rights for employees unless the SME sector employers are recognised by the State.
  7. Social Protection – Dialogue with workers on how best to close the pension deficit; extend Auto Enrolment (AE) to the self-employed, part-time workers and public servants; remove the €20,000 AE income threshold; Govt departments must account for the current and accrued pension liabilities staff annually; Increase the Band 1-, 2- and 3-income thresholds for social and affordable housing to €80k, €70k and €60k; audit and publish the qualification criteria for payment in respect of disability allowances.
  8. Establish a Social Progress Indicator.
  9. Ban historic upward-only rent clauses.
  10. Over-The-Horizon Risks – The National Treasury Management Agency should publish Ireland’s debt profile of all our national debt; Taoiseach to initiate an annual gap closure plan to address gaps identified in the National Risk Assessment (NRA); Department of Public Expenditure and Reform to set out estimates to close gaps identified by the NRA in capital and current expenditure terms.

A copy of the submission can be accessed here.