‘Unprecedented’ the new normal as government again leverages tax system to help individuals and businesses in 3rd ‘crisis’ Budget 
 
Accountants will have critical role in helping businesses access new energy support scheme supports

Tuesday 27 September 2022 – The cost of living Budget announced by the government should help SMEs survive the coming months, but there has been little emphasis on addressing capacity constraints in the health, education, and housing sectors. Reacting to Budget 2023, Chartered Accountants Ireland, the largest professional accountancy body on the island of Ireland, noted that the unprecedented has now become the new normal as the Government responds to crisis circumstances for the third year in a row. 

Commenting, Dr Brian Keegan, Director of Public Affairs, Chartered Accountants Ireland said

“Previously, Budget Day was mainly focused on collecting taxes, however, since Budget 2021, the focus has shifted to targeting behaviour by intervening directly in the operation of the economy. We saw the effectiveness of this when the economy recovered so quickly from COVID-19 disruption. The Government has learned from this and is again using the tax system to put money back in businesses and people’s pockets to help in the face of inflation and rising energy costs.”

Administering the Temporary Business Energy Support Scheme (TBESS)

Keegan commented

“Today’s decision to introduce a new energy support scheme, similar to the pandemic-era EWSS, will come as a major relief for many small businesses that are facing crippling energy bills over the winter months. These supports cannot last forever, but they are an example of the targeted approach by the state which has worked well in the past.  
 
“Simplicity and efficiency in implementation are going to be critical in getting the supports to businesses as quickly as possible.”

Missed opportunity to tackle capacity constraints 

Keegan commented 

“There has been more emphasis today on demand rather than on ability to supply. There is an increase in the number of doctor only medical cards, but it will increase the pressure on GPs. Our third level system is accessible and after today even more affordable, but are we investing enough in our universities and colleges? Some much-needed relief was provided today for hard-pressed renters, but are the measures to improve the supply of accommodation going to improve the supply quickly enough?”

On the housing front, today’s announcements will not help renters find accommodation as landlords are still leaving the market.  

Keegan commented

“It was a missed opportunity to not use the Budget as a means to incentivise landlords to remain in the rental market. Targeted tax measures should have been introduced to prevent the removal of rental properties from the market, reduce the displacement of tenants, and result in more residential properties becoming available to purchase. The omission of such measures from this Budget will lead to continued hardship for those renting or trying to buy in the current market.”

In its pre-Budget submission, Chartered Accountants Ireland, under the auspices of the CCAB-I, outlined a range of tax measures and supports which could have been used to target elements of the housing crisis. These proposals included:

• Making available a relief from Capital Gains Tax on disposal of a rental property, conditional on the property being sold with a tenant in situ and/or a requirement for the property to continue in use as a rental property.
• Local property tax to be allowed as a deduction against rental income.
• Where landlords retrofit a property to improve its energy rating, 100% capital allowances should be offered in the year of work. 

ENDS