Budget puts country on sustainable path: IBEC

The director-general of the business and employers organisation, IBEC, Danny McCoy, described last week's budget is a turning point as it stops the deficit rising and puts Ireland on a sustainable path. "The right thing to do was the hard thing to do and the right thing has been done. Confidence can now be restored both to consumers and to international investors," he said. "To get the country back to work, the public finances need to be stabilised without further major increases in taxation. It is of critical importance that we make the necessary correction now, rather than dragging it out over many years," he added. Constructive measures he pointed to in the budget include • the reduction in indirect taxes; • training places for the unemployed; • reductions in employers' PRSI associated with new employment from the Live Register; • the intention to broaden the tax base, allowing employment taxes to remain low; • the national solidarity bond to support capital investment; • the affirmation that Ireland's low corporation tax will remain, and • the intention to rationalise levies on income. IBEC said the Government could have done more to direct significant funds towards keeping people in work, rather than spending the same funds on supporting those people as they lose their jobs. Also, he said it was regrettable that the carbon tax is mainly a revenue-raising measure. A more effective environmental policy would have been to fully ring-fence all revenues from carbon tax to support energy efficiency and labour cost reduction measures, Mr McCoy added. The Irish Small & Medium Enterprises Association (ISME), meanwhile, while welcoming a number of measures announced in the budget, has been critical of the fact that so few incentives were introduced to assist smaller enterprises remain in business, develop and grow. The association described the budget as a "lost opportunity" that has failed to recognise the plight of small businesses and failed to introduce stimulus measures that would assist them in maintaining employment and remain competitive. ISME acknowledged the badly needed cuts in public sector pay but urged the Government to implement the cuts in full and not be influenced by the expected onslaught of protest from the public sector unions. The reductions in social welfare payments and child benefit are unfortunate but necessary, ISME said, due to the state of the exchequer finances but are ameliorated by the current negative inflation. ISME said it believed the decision not to increase income taxes is a wise move as the economy is already experiencing diminishing returns as a consequence of the introduction of income levies in the supplementary budget. The introduction of a vehicle scrappage scheme was welcome and should assist the motor sector, which has been decimated over the last number of months, it added. It is extremely unfortunate that initiatives were not introduced to assist other sectors of the business community, who are experiencing similar difficulties, ISME went on. "With unemployment doubling in the last 12 months, no incentives were introduced to assist enterprises, particularly micro-enterprises, to maintain employment. With the number of redundancies expected to increase, it would have made economic sense to ease the cost of labour for business and introduce wide-ranging incentives to keep people in work," an ISME spokesman said. On a positive note, he welcomed the announcement to provide PRSI relief to employers who take people off the dole. However, the association said it was extremely concerned at the decision to reduce the level of funding for training those in employment. "The importance of upskilling for the so-called Smart Economy seems to have been lost on the minister and his colleagues," the spokesman added.