Today’s budget is a positive signal for jobs and investment and, despite the limitations on resources available for new measures, I believe there are strong grounds for the business community to be positive and optimistic. It is worth acknowledging the extraordinary achievement of how far the economy has come today with a balanced budget and a debt ratio heading to be one of the lowest within the European Union.
The low level of infrastructure investment, a legacy of past economic difficulties, continues to be a key frustration shared by both business and society. However, this budget is a clear indication of a resolve within government to address this, despite limited fiscal room for manoeuvre. The increased resources announced today for capital spending are an important step in the right direction. The business community should be 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.
Most notable is the Minister for Finance, Public Expenditure and Reform, Paschal Donohoe’s introduction of subtle but vital policy shifts on personal taxation and infrastructure. 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.
While the intention of government is to make a cashflow saving in 2018 from changes to the taxation of Intellectual property, this will be largely revenue neutral for business overtime. In addition, while the announcements from a housing perspective are positive, there are commercial stamp duty increases which could have unintended consequences for the wider property sector.
On Brexit, more clarity should have been given to business and perhaps further resources. The new loan scheme targeted at businesses most impacted is welcome, but further resources will be needed over the coming years to support innovation and equipment investment in those companies most affected. Furthermore 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 more comprehensive Ibec analysis of Budget 2018 is available at this link which I hope you find useful: www.ibec.ie/0/BudgetAnalysis
As always I welcome your comments and feedback on the Ibec position, so please keep in touch.
Tuesday, 10 October 2017