SFA: Budget will bring back confidence in economy

The Small Firms Association has said today’s Budget will restore confidence to the economy.

"The commitment by the Minister for Finance to the full implementation of the National Development Plan, and the 12% increase in capital spending in 2008, should ensure that Ireland improves its ranking in the World Competitiveness League, which is significant for both foreign direct investment and indigenous business prosperity," said its chairman, Pat Crotty.

However, the SFA chairman was critical of the level of current public spending which is set at 8.2%.

Mr Crotty said: "No small business could afford to allow its costs to spiral to this level, and it is critical going forward in a moderately growing economy, that government spending returns to the level of inflation, which the minister himself has forecasted to be just 2.4% in 2008."

The SFA chairman welcomed the indexation of income tax and the increase in tax credits, as being significant as the social partners head into pay talks early in the New Year, noting that this, along with the forecasted inflation rate of 2.4%, should serve to moderate wage expectations.

The association endorsed the extension of the BES scheme to recycling companies, and the fixing of the base year for calculation of the R&D tax credit at 2003 until 2013.

The SFA however viewed the Minister as missing his opportunity to secure consumer spending, by reducing the ‘standard rate’ of VAT by 2% in Budget 2008 to 19%, which the SFA had called for in its pre-budget submission meeting with the minister.

The SFA called on the minister to look at this issue seriously in advance of Budget 2009, as a critical aspect in lowering the inflation rate and in boosting consumer confidence and thus consumer spending.

It would also be of huge assistance to those companies operating in the international marketplace, said the SFA, as Ireland has the highest 'reduced rate' of VAT, at 13.5%, and the third highest 'standard rate' of VAT at 21% in the European Union.

"With the increase in on-line purchasing, which knows no borders and the current strong euro, we need an incentive for people to continue buying in Ireland, thus supporting the economy and jobs here," concluded Crotty.