Organisations representing Irish small and medium enterprises have offered a mixed response to the business stimulus measures outlined in Budget 2012.
While the Small Firms Association (SFA) said the budget contained “many welcome measures,” the Irish Small and Medium Enterprises association (ISME) decried what it called a “smoke and mirrors” budget that would “do nothing for small business”.
“Budget 2012 contains many welcome measures that will support small business establishment and development,” said SFA Chairman Ian Martin, referring specifically to the extension of the corporate tax break for start-ups to 2014, the foreign earnings deductions to support companies entering emerging markets and the improvements to the R&D tax credit scheme.
However, Mr Martin strongly condemned the 2% increase in the higher rate of VAT, as killing off consumer sentiment further.
“As the VAT tax take is dependent on consumption, there is no guarantee that it will raise the tax revenues the Government expects,” Mr Martin said.
“The Government needs to do more to improve consumer sentiment and encourage spending to order to restore domestic demand.”
However Jim Curran of ISME said the budget was “uninspiring”, and will do nothing to stimulate businesses, create employment or provide the certainty necessary for future growth.
While also welcoming a selection of pro-business initiatives outlined by Finance Minister Michael Noonan, Mr Curran said ISME was also extremely concerned by the “short-sighted” increase in VAT, and said increases in motor and carbon tax will increase business costs.
“This Budget will only make a bad problem even worse for the SME sector, by increasing business costs, with the threat of more to come,” said Mr Curran.
“The failure to implement initiatives to assist, promote and incentivise enterprise, the area of the economy which is relied on to produce wealth and generate employment, will be viewed as a major own-goal.
“This Budget is over simplistic in its drive to generate income and cut expenditure, with little or no consideration for future economic growth and development.”