Budget Will be Positive For Jobs and Investment – Ibec
Ibec, the group that represents Irish business, has reacted positively to Budget 2018, stating that it will help support further job creation and business investment. It noted that while the scale of resources for new measures was limited this year, important policy shifts on personal tax and infrastructure will underpin business confidence.
Ibec CEO Danny McCoy (pictured) stated: “This is largely a positive budget for business, employment and the wider economy. The income tax package is a welcome change of direction towards reducing the burden on average income earners and it will help businesses to attract and retain talent. Ensuring that those on an average income will not be taxed at the marginal rate in future sends out a positive message that work will be rewarded. Coupled with some improvements to share benefits schemes, this represents a sensible reform of the income tax system.
“The low level of infrastructure investment continues to be one of the key challenges facing the Irish economy and is a legacy of our past economic difficulties. The increased resources announced today for capital spending are an important step in the right direction. The business community is confident that following the publication of the new 10 year capital spending plan later this year, Ireland will be on the way to making real progress in delivering an ambitious investment programme which will improve the quality of life for all.”
Danny McCoy concluded: “While we welcome the new loan scheme targeted at Brexit impacted firms, more could have been done to Brexit proof the budget. Further resources will be needed over the coming years to support innovation and equipment investment in those companies most affected by Brexit risks. The National Training Fund levy increase could damage the competitiveness of Irish business if the resources are not ring-fenced for targeted in-work training programmes to help companies upskill their workforce.”
A Welcome Focus on Housing
Property Industry Ireland (PII), the Ibec group for businesses working in the property sector, said that while the Budget focus on housing is welcome, further steps could have been taken help the viability of homebuilding.
PII Director, Dr. David Duffy stated: “The commitment to increase spending on housing infrastructure and the establishment of the Home Building Finance Ireland should stimulate some additional supply.”
PII had urged Government to retain the Help-to-Buy scheme. The decision to leave it unchanged in the Budget will help bring certainty to the new homes market.
“Viability remains a key constraint. We feel that the Budget missed the opportunity to implement measures to improve the viability of homebuilding, for example a reduction in the VAT rate for construction.
“While PII welcomes the announcement of initiatives to promote apartment development by Minister Eoghan Murphy, in particular on height and car parking, it is very disappointing that today’s Budget did not include a range of measures aimed at the private rented sector. The census shows that the numbers living in rented accommodation continues to increase.”
Personal Tax Cuts Welcome – Competitiveness Not Addressed
Retail Ireland, the Ibec group that represents the retail sector, has welcomed the cuts to income tax announced as part of Budget 2018, but expressed its disappointment at Government’s failure to address the growing competitiveness concerns of Irish retailers. It further expressed its disappointment at Government’s failure to introduce specific supports to address Brexit related concerns in the domestic economy.
Retail Ireland Director, Thomas Burke stated: “This mix of actions to ease the tax burden on consumers is to be welcomed, as it will help improve consumer confidence and increase spending power. This will in turn help sustain the ongoing recovery in the retail sector. However, retailers had hoped that the Government would also address spiralling input costs, and introduce measures to support the competitiveness of domestic Irish businesses, most exposed to Brexit pressures. It is disappointing that such measures have not materialised.
“The decision to increase the National Minimum Wage to €9.55 in 2018, a cumulative increase of over 10% since January 2016, will significantly impact the sector’s ability to provide job opportunities to new entrants and grow employment in the regions. Over the past four years, employment growth in the retail sector has been slow, with only 6,300 new jobs created. Today’s announcement of a further increase in the National Minimum Wage, along with an increase in the employers National Training Fund levy, will only serve to further slow that growth. Furthermore, it will increase wage pressures for retailers at levels well above the National Minimum Wage rate.
“Retailers also signalled their disappointment at Government’s failure to introduce targeted measures to support domestically focused businesses facing Brexit related challenges.
“It is regrettable that Government have decided against introducing measures to incentivise the migration of Irish retailers into the e-commerce channel. Retail Ireland has long called for the introduction of a tax credit which would help Irish retailers, and the Exchequer, take a greater share of the increasing volume of online retail trade. Such supports would help wrestle back some of the 75% of total online spend which currently leaves Ireland to foreign based websites and would significantly increase tax take for the exchequer, with minimal investment.”