Budget a step in the right direction
I anxiously awaited the budget announcement. There were three areas I paid particular attention to:
Corporation Tax — Our businesses, especially the restaurants, are heavily dependent on corporate business, a lot of which comes from the large multinationals. While I felt it was unlikely to change in this budget, it was good to see no change was even hinted at, especially in light of international pressure. Cork people still talk about the effect on the city when Fords and Dunlops closed – I feel anything that jeopardised the likes of Apple or the pharmaceutical industries would be equally disastrous for the area.
Vat Rate — We have been fortunate to be in a sector where affirmative action by the Government in dropping the Vat rate to 9% on food sales has resulted in a growth in business. In Electric, for example, we saw food sales rise by 30% this year which has had a knock-on effect on our suppliers. Our main food suppliers are quality local butchers, dairy businesses, and local vegetable suppliers who have all been able to weather the recession. Wage rates in Electric and the restaurant industry generally have gone up over the last year and we have been fortunate as we never had to put staff on shortened hours or reduced their rates. The reduction in Vat enabled us to commit to pay above minimum wage to all permanent employees.
The bar trade stands in stark contrast to this and with previous increases in Vat and excise duty our bar trade has not grown at all this year, and many of our colleagues have seen their trade contract.
The 9% Vat also applies to hotels and has helped Cork hotels remain competitive with other destinations. Cork is thriving as a tourist destination and this is in no small part due to this.
Income Tax/USC — We are dependent on the disposable income in our customers’ pockets. While I was disappointed not to see more significant tax cuts and reliefs, it is a step in the right direction. People need stability before confidence returns and spending increases — in that regards this budget has delivered.
Green shoots are beginning to turn into tangible positives like jobs and wage increases. Confidence is returning and while people are still cautious, they are willing to spend on a quality offering. We expanded into Dublin this year and would not have done so unless we felt that the economy was on an upward curve. I hope we are right!
It’s encouraging that after several years of austerity budgets we seem to be turning a corner in terms of the measures introduced in Budget 2015.
We welcome the news of 4.7% economic growth for this year and the targeting of a reduced budget deficit of 2.7% for next year.
The construction sector has been through an unprecedented period of inactivity, and while there has been some uplift, there are still in excess of 80,000 people out of work within the sector. If Ireland is to truly recover, the construction sector requires various strands of stimulation and it’s somewhat encouraging that Budget 2015 has allocated funding in an attempt to reignite activity.
The Social and Affordable Housing Strategy that will lead to the construction of 2,500 social housing units next year and 6,700 by 2017 should increase employment in the sector and provide much-needed homes across Ireland. The announcement of €300m for PPP social housing projects is to be welcomed. This, as stated, will not be the land-swap model historically used, but will be similar to the model used for the building of schools, under which BAM Group Ireland successfully delivered Schools Bundle 3 over the past two years and is the preferred bidder for Schools Bundle 4.
The Government’s Construction 20:20 Strategy to support construction must continue to be a priority for future investment. The continuation of the Home Renovation Incentive and the extension of the scheme to rental properties will help boost the refurbishment and renovation sector. It’s also positive news that the Living City Initiative is to be extended, which should rejuvenate neglected areas in our city centres. However, transportation and marine infrastructural investment should not be neglected.
The Government’s continuing commitment to FDI investment, particularly in retaining the 12.5% corporation tax rate is encouraging. Ireland needs to compete globally to attract large multinational organisations here and our corporation tax is clearly a key component of our success. While general construction activity remains challenged, there has been an increase in private sector investment particularly in the office sector, driven by FDI demand.
It would have been a positive move if the minister had implemented a reduced Vat rate for the construction sector, similar to the 9% rate introduced within the hospitality sector which has produced 23,000 jobs.
Overall, Budget 2015 will help assist in stimulating the construction sector and increase employment. The measures taken to boost employment are to be welcomed and BAM has played an active role in recruiting through initiatives such as the Back to Work Masterclass.
As a director of a growing company and the father of three young children, times are tight financially and it is good to feel even slightly better off after a budget for the first time in seven years. Whether that lasts beyond the first water bill is another question. Tax relief on this is great but the uncertainty remains; one can but hope the people who set the water allowance for children actually have experience of them.
While glad to see a reduction in income tax and USC, I would have been as happy for the Government to announce significant increases in spending on health and especially education. We really need to see an improvement in these services and, given their current state, a promise that things won’t get any worse is unimpressive.
With respect to child allowance, I am not sure that raising it by €5 is enough to make any real difference to those who actually need it and, without being flippant, this includes the Labour Party. Once again I am disappointed that no attempt was made to equalise the tax position of company directors and their immediate families. This is very unfair on those taking on real risks to create jobs and opportunities. I don’t believe the political class as a whole have any understanding of what it takes to generate revenue to pay employees, not to mention yourself and the Revenue, month in and month out. In a similar vein, the continued levy on private sector pension investments is very unfair.
There was no mention of the JobBridge scheme. Although the scheme has taken a lot of bad press, I believe that at Zing we have used it exactly as it is meant to be used and we would be sorry to see it go. From the stories in the media, it is clear the rules need to be tightened but we have three employees who cross-trained into IT, were taken on via the scheme, and are now full-time professional programmers. We would hope to use JobBridge or similar to help us add more people in the coming year.
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