Tax expert: Reduction in rate of USC ‘best way’ to support Cork businesses

A reduction in the rate of universal social charge is the most important measure the Government can introduce to support Cork businesses, according to a tax expert.

PricewaterhouseCoopers Cork tax director Nicola Quinn says the tax burden on SMEs is one of the biggest issues facing the sector along with access to credit.

Despite the difficulties owner-managed enterprises are facing, business sentiment in the city is improving.

“We are seeing an improvement; a bit more positivity than we would’ve seen 12 months ago. People are working through their debt issues and are beginning to get to a stage where they can start to get back to normal business,” said Ms Quinn.

“The self-employed are paying a top rate of USC of 10%, which is really unfair considering these are the people that are going out and generating jobs, so we would be hoping that there’d be a reduction in the rate of USC across the board because it’s acting as a disincentive to entrepreneurship and a disincentive to work,” she added.

Cutting the top rate of the universal social charge by 1% or 2% would be reasonable, given the prevailing economic climate and would have a greater impact than a reduction in PAYE, Ms Quinn claimed.

Speaking after a PwC business breakfast attended by a number of local business-owners yesterday, Ms Quinn also said that the export market has provided a lifeline to numerous local businesses since the economic downturn.

“Lots of companies that we deal with are having great success outside of Ireland and have re-shaped themselves to go into the export market. For some companies, it’s a natural expansion... for other companies I think it has been a lifeline for them because their UK sales, for example, might be helping them through where their domestic sales are not so strong,” she said.

Indigenous businesses are also experiencing wage pressures as they try to compete with multinational firms for available talent in the area. This, combined with a geographical disadvantage whereby many jobseekers look to Dublin for employment, is leading to a skills shortage for indigenous businesses in some sectors.

“Particularly now as Dublin begins to take off again, you’re competing with Dublin in terms of trying to retain people in Cork and the other aspect of that is if you’re competing to bring in talent from outside of Ireland they always want to go to the first city... everybody wants to go to Dublin,” said Ms Quinn.