Accountants: Budget damages competitiveness

The Institute of Certified Public Accountants has said that today's Budget has done no favours for the competitiveness of Irish business in a year when many businesses have been impacted by the global market slowdown.

"With prospects of economic recovery slim for 2003, the changes in Stamp Duty, Capital Gains Tax, Capital Allowances and VAT will all impact negatively on Irish business," Eamonn Siggins, chief executive of the Institute of Certified Public Accountants said.

"The combined changes will yield a high level of extraction from business. The changes in Capital Allowances for example, will see the annual yield from business increase from €20m in 2003 to over €300m by 2007.

"Any company considering reinvesting money to fund business expansion in new premises or new plant and equipment is likely to reconsider such investment in light of today's Budget.

"The changes in Stamp Duty, as it affects commercial property, and the Capital Allowances, as it affects Plant & Equipment and Motor Vehicles, will heavily influence future commercial investment decisions."

Siggins said that bringing forward the payment of Capital Gains Tax and the abolition of roll-over reliefs will have negative cash-flow implications for business in 2003.

Also, the addition of 1% to the 12.5% VAT rate is going to add to the bottom-line costs of a range of businesses, further eroding competitiveness.

He said the only positives for business in this budget are the extra investment in infrastructure and the apparent firm stand on current spending.