In its Budget 2015 submission published today, the group calls for €300 million worth of income tax reductions, a €100 million reduction in consumer taxes and the abolition of the pensions levy. It said the budget must focus on reducing tax rates and boosting investment across the economy.
Ibec CEO Danny McCoy said: "We have an opportunity to put fresh momentum behind Ireland’s recovery. Now is the time to draw a line under the period of painful austerity. It was necessary, but the economy has entered a new phase. This needs to be reflected in the budget. We have a chance to give consumers a break, put money back into peoples' pockets and kick start personal, commercial and public investment. If we get it right, we can look forward to strong growth in the months and years ahead. This will result in thousands of new jobs."
Strong growth, less austerity: New economic data means less austerity is needed. Ireland is required to reach a 2.9% budget deficit target in 2015, but Ibec believes that a prudent approach would be to target a 2.7% deficit. Crucially, this will support Ireland's reputation and credibility in the international financial markets. The 2.7% target can be reached with a net fiscal adjustment of just €200 million.
Cut income and consumer taxes: With the economy doing well, the resources are now available to reduce income and consumer taxes. Consumers deserve a break and getting more money back into the economy will boost economic activity and support job creation. In Budget 2015 the Government should:
- Increase the entry point to the marginal tax rate from €32,800 to €34,800
- Reduce the marginal tax rate from 52% to 51%
- Reform the universal social charge so self-employed and PAYE workers are treated the same
- Reverse recent alcohol excise increases
- Continue the reduced 9% VAT rate for the hospitality sector
- Drop the unfair pensions levy, as had been promised
Improve Ireland’s international tax offering: Ireland has become less attractive to mobile investment in recent years. This is due to rising taxes here and competitor economies raising their game. The UK in particular has reformed its tax code to make it a much more attractive location for investment. The commitment to the 12.5% corporate tax rate must remain, but we also need to improve Ireland's intellectual property tax regime and provide greater certainty around the R&D tax credit scheme.
The recommended tax reductions will require the implementation of water charges in 2015 and some further current expenditure reductions. However, the proposed overall package will be growth enhancing, and is supported by extensive international evidence which supports a shift from labour taxes to property-based taxes and other user charges. See full submission for detailed breakdown.
- Ibec_Budget_2015_ Submission_Infographic.pdf - 212 Kbytes
- Ibec Budget 2015 Submission.pdf - 1,001 Kbytes
Monday, 7 July 2014