SFA: Budget should 'generate greater certainty'

The Chairman of the Small Firms Association, Dr Aidan O'Boyle has said that "today’s Budget should generate greater certainty among small businesses".

Mr O'Boyle said: "However, this budget is not sufficient to improve consumer confidence and get people spending."

Mr O’Boyle welcomed the extension of the 15-day prompt payment by the end of June 2011 to the HSE, Local Authorities and state agencies.

Regarding access to credit, O’Boyle said that while further investment was being made in to the banking system the Government had again ignored the issue of credit for small firms.

He said: "This Budget has ignored the fact that many viable small businesses lack two key ingredients to access financial support from the banking system: they lack collateral because of the property bubble collapse and associated high negative equity and they lack a good track record over the past two to three years because of the worldwide economic recession and loss of consumer confidence and spending at home.

“The banks are commercial entities and will not move from risk assessment criteria about what is a viable business and therefore we will still require government intervention to breach this gap, with some form of risk sharing scheme between government and the banks."

The SFA welcomed the Minister’s strong commitment to retain the 12.5% rate of corporation tax, and the three-year corporate and capital tax exemption for new businesses set up in 2011.

The SFA said: "The extension of the Employer Job PRSI Incentive Scheme to the end of 2011 and the review committed under the National Recovery Plan of the REA and ERO frameworks over the next three months are positive steps.

"The review of the REAs will assist in bringing labour costs in these sectors in line with the current economic environment.

Mr O’Boyle said the raising of the PRSI rate for the self employed owner manager is "not encouraging" for small business development.

Commenting on the Social Welfare reforms announced, O’Boyle said that the recent developments in the labour market have highlighted the need to reform the social welfare system in Ireland in order to provide a greater incentive to take up work or training opportunities.