Business reaction to Budget 2012 has been broadly positive, with almost all business representative groups welcoming the pro-business measures announced today, though there continued to be widespread criticism of the 2 per cent VAT hike.
Employers’ group Ibec sounded a negative note, however, with director Danny McCoy describing Budget 2012 as “one of the most inflationary budget in decades”, and criticising the government for relying too heavily on increasing tax, rather than reducing current expenditure.
"€1.6 billion will be raised in tax, with only €1.45 billion saved in current expenditure reductions, and this will undermine future economic growth” he said.
The group also described the decision to abolish employer PRSI relief on employee pensions as “a further significant cost on employment.”
A number of pro-business measures were announced in this year’s budget. These include:
a corporate tax exemption for new start up companies extended for three years;
A Foreign Earnings Deduction which will apply where an individual spends 60 days a year developing markets for Ireland in Brazil, Russia, India, China and South Africa;
The first €100,000 of R&D expenditure of all companies will be allowed on a volume basis for the purpose of the R&D Tax Credit.
The response from other business groups was more positive, with the Institute of Directors welcoming specific measures such as the foreign earnings deduction for companies exporting to emerging markets, the extension of the corporate tax exemption scheme for start-ups by three years, and the R&D tax credit.
It also welcomed the Government’s pledge to safeguard Ireland’s corporation tax rate.
The chairman of the Small Firms Association, Ian Martin said that Budget 2012 contained “many welcome measures that will support small business establishment and development."
Mr Martin welcomed the announcement that social welfare sick pay costs would not be passed onto employers, as well as the announcement that Nama is willing to negotiate rents on properties.
John Whelan, chief executive of the Irish Exporters’ Association, described the budget as “one of the most export promotional budgets we have seen for decades”
“The IEA have been lobbying for several years for a Foreign Earnings Deduction Scheme to support the export drive into the fast growing markets of Brazil, Russia, India and China and strongly welcomes the announcement in today’s Budget”, he said.
