- Increase in national capital expenditure welcome
- Failure to introduce tax equity for the self-employed disappointing
- Tweaks to KEEP scheme unlikely to increase uptake
- Employment and Investment Incentive Scheme (EIIS), R&D Tax Credit and Knowledge Development Box left unmentioned
- Promised peer-to-peer lending regulation is welcomed
- 29% increase in funding for Skillnet Ireland for 2019 is positive
ISME, the Irish SME Association today (October 9th) has welcomed the increased capital spending in today’s Budget, which will benefit indigenous business. However, the Association has noted that those aspects of the Budget directly related to SMEs lack specifics.
The Association has compiled a score card on the main issues impacting the SME sector and compared our pre-budget submission with Budget 2019.
ISME CEO Neil McDonnell stated:
“On taxation, the gap between self-employed and PAYE workers was meant to close last year. Yet this year yet we have only gone two fifths of the way. The cost of full equity between self-employed and PAYE workers would have been just €37m. But this has been ignored in favour of increased spending in the public sector.
The lifting of the marginal rate threshold to €35,200 is welcome, but this is still €3,382 below the average industrial wage. Even the Nordics do not take low earners onto marginal tax rates so quickly.
Regarding entrepreneurial tax reliefs, the KEEP scheme which failed to engage SMEs last year, has been tweaked.
Budget 2019 announced an increase in the grant amount to 100% of salary, and an increase in the award limit to €300,000 per employee, which is welcome. However, the three-year limit for grant has been replaced with a lifetime limit, which suggests that employees may be restricted to a single lifetime gain. No changes to the €3m market value restriction, or the opaque and unmanageable valuation criteria have been announced. “
Commenting on the change to the 9% VAT rate Mr McDonnell said:
“While the 9% VAT rate has been under incessant attack, it has delivered for thousands of workers and small hospitality businesses and the Exchequer. The effects upon all three of the return to the 13.5% remain to be seen.”
Eilis Quinlan, ISME National Council Member, and Owner of Quinlan & Co Accountants said:
“Unless the terms and conditions for the KEEP scheme are loosened under the Finance Bill 2019, we do not expect any significant uptake among SMEs. The other entrepreneurial reliefs such as EIIS, the R&D tax credit and the Knowledge Development Box were left largely unmentioned.”
There has been no change to the CGT rate in Budget 2019. This was a huge missed opportunity for the Minister and for Ireland to become competitive with other OECD countries. They could have increased the yield significantly by lowering the relief.”
Jamie O’Hanlon, ISME National Council Member and partner in Avid Partners Accountants and Business Advisers said:
“As a result of the entrepreneur relief of €1m not being widened, there is an increased risk of business flight from Ireland. The gap between the UK and Ireland was not addressed and in fact has now widened thus increasing the risk of business flight.”
ISME CEO Neil McDonnell concluded:
“We look forward to the promised regulation of peer-to-peer lending. We welcome the capital expenditure of €7.4bn announced in the Budget, which is 3.5% of GNI*, and is slowly approaching the ISME target of 4% of GNI*.”
For further information, please contact
Wayne Tobin, Press, Policy and Research Officer
T: 01 6622755