The effectiveness of Budget
2021 will be measured by the billions of euro the government is willing to
borrow to invest in the Irish economy. The bigger this investment, the more
assured Ireland’s economic future will be post-COVID-19, according to Chartered
Accountants Ireland.
Commenting, Brian Keegan, Director of Public Affairs with
Chartered Accountants Ireland said
“Since March, the government has
invested huge sums by way of wage supports for business, social welfare
supports and retraining and reskilling for those whose jobs have disappeared
permanently. It is very positive to see that support continue in today’s
Budget, both for those still in employment and those who have lost their jobs,
at the expense of regressive tax measures.
“Clearly a key consideration in
the Budget is the price of money that the government will pay to borrow in the
markets, but what we have done so far this year is working.”
Extending supports in Budget ‘21
Measures announced which extend wage supports, reduce the
VAT rate from 13.5% to 9% for the hospitality sector, give regular compensation
payments to businesses restricted by COVID-19 safety measures and extend the
debt warehousing scheme to help the self-employed manage their tax debt give
Irish businesses something tangible to rely on and build upon. This certainty
is key in a time of turmoil brought on by COVID-19 restrictions and an unknown
post-Brexit trading landscape.
Keegan continued
“The funds committed for
retraining and upskilling the Irish workforce as announced in today’s Budget
means that Ireland will be work-ready as soon as the COVID-19 crisis is behind
us.
“Key to the success of these
supports will be ensuring that recipients do not become entangled and impeded by
red tape and excessive bureaucracy. If the bar to entry is too high in terms of
time or expertise required, we run the risk of businesses being unable to avail
of much needed supports. We saw evidence of this in the operation of the TWSS
and we must avoid going down the same route; it's the last thing that
businesses on the brink need.”
Corporation Tax
The Government’s plans to relaunch Ireland’s Corporation Tax
Roadmap sends out a clear message to Foreign Direct Investment that Ireland is
a committed and active participant in the OECD’s tax reform work.
Keegan commented
“Corporation tax receipts have
proven to be a stalwart revenue source to the Irish exchequer during one of the
most sudden economic shocks we have seen. In the face of questions as to the
sustainability of this revenue source, in Budget ’21 today, the government is
saying that Ireland can continue to reliably depend on these receipts in
2021.
“Notwithstanding our commitment
to the OECD programme of reform, Ireland is also committed to a national policy
of being the best location in the world for multinationals to do fair
business.”
Missed opportunities to nurture entrepreneurship
With Ireland’s rate of Capital Gains Tax among the highest
in the EU, the decision once again this year to not reduce the rate from 33% to
a more palatable 25% is a missed opportunity. A temporary reduced CGT
rate would have brought in much needed tax revenue from a pent-up appetite for
transactions which must go unsatisfied for now.
The tax system can be used to encourage private risk-based
investment in start-ups. Private investors have cash doing nothing on deposit
and all they need is a government initiative to channel much needed investment
into start-ups. Plans for another review of the Employment Investment
Incentive Scheme need to deliver real change to drive private investment to
support start-ups.
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