Accountants bearish on the economy

SEVEN out of 10 chartered accountants are worried about the Irish economy and half the profession believes things will get worse before they get better.

And yesterday Finance Minister, Charlie McCreevy warned the profession not to abuse tax incentive schemes as he will act quickly to close loopholes.

The Institute of Chartered Accountants in Ireland surveyed 1,270 members about their concerns for the economy in general and their own sectors in particular.

The survey indicates 73% of accountants are worried about the economy. The breakdown is 67% are somewhat worried and 6% very worried. Just 1% were very confident and 26% were fairly confident. However, when asked about their own sector of the economy, just 43% were worried: 36% somewhat and 7% very worried. Half those surveyed were confident and 7% said they were very confident going forward.

Of accountants working in the IT sector, 70% pronounced themselves worried: 45% somewhat and 25% very worried. Zero percent of IT accountants classed themselves very confident about the sector.

Accountants working in banking were the most bullish with 0% saying their level of confidence could be classed as very worried. Twelve months ago 0% of accountants in banking were very confident. Today 69% of accountants in banking are confident about their sector: nine percent are very confident, and 60% are fairly confident.

Accountants in the manufacturing sector were also buoyant about their sector with 11% very confident. But this is well down from the 22% who were very confident a year ago.

Just over half -- 51% -- of accountants believe economic conditions will be worse in a year, 12% say things will be better and 37% say things will be the same.

Speaking to the Leinster Society of Chartered Accountants Minister McCreevy said less growth means less tax revenue.

“The base year yield for 2002 is projected to be €1.3 billion less than projected at budget time and this will have a knock-on effect for 2003 and later. These are the facts. They are inescapable,” he said.

Minister McCreevy said he will look carefully at preserving the State’s current revenue base in his December budget.

“I have introduced many good (tax) reliefs and welcome restructuring of the tax system to assist the ordinary taxpayer and to stimulate economic renewal.

“I have also acted firmly since my first day in office to close tax loopholes and unacceptable and artificial tax planning schemes. I will be as ready as ever to act to protect the revenue base next year.

“I say this to an audience that recognises the value of tax reliefs but also knows the damage that can be done by abusive tax avoidance schemes, not least to the acceptability of constructive tax incentives themselves.

“ A responsible approach on the part of tax practitioners will pay dividends to the profession as well as to the Exchequer,” he cautioned.