Isme wants standard Vat rate and hospitality Vat rate reduced in budget

The business group claims it would help offset the decline in revenues to the Exchequer, and boost many small firms

Business group Isme seeks greater representation on key policy-making boards, saying the 'Government continues to be dismissive of the strategic importance of the SME sector in Ireland'.

Additional economic activity from cutting the standard rate of Vat to 21% from 23% and reducing the Vat business hospitality rate back down to 9% would help offset the decline in revenues to the Exchequer, and boost many small firms, business group Isme has said. 

Cutting both rates of Vat, and not just the Vat hospitality rate currently at 13.5%, are part of Isme's submission to persuade Finance Minister Michael McGrath in framing his budget.  

Department of Finance officials have in the past calculated relatively high costs to the Exchequer from cutting Vat rates, but their estimates don't take into account the additional activity and the "demonstrable" boost to employment, Isme chief executive Neil McDonnell said. 

On personal taxes, Mr McDonnell said that all employees on the average industrial wage should be removed from paying the marginal rate of income tax, but that all workers should pay some sort of tax on their earnings at the standard income tax rate band. 

To help boost the social insurance fund, all employees should pay some level of PRSI, which along with a redesigned Capital Gains Tax would bring in an additional €1.4bn, according to Isme. 

The business group also wants the Government to revisit the way increases to the minimum wage are calculated by capping rises to the consumer price index. 

With the public finances increasingly drawing on the taxes collected from the multinationals in both corporation taxes and income taxes, Mr McDonnell said that Government should give a greater voice to small and medium-sized firms to help shape policies that favour small firms. 

“There is a relatively benign fiscal situation at this time which means the Government can make strategic choices, rather than have budgetary decisions forced on them by circumstance. This provides plenty of opportunity to make the right decisions and choices," he said. 

"But a fundamental requirement of Isme and the SME sector overall is that the State engages formally with Ireland’s SME sector in the same way it does the multinational, semi-state and public sectors," the Isme chief said. 

The business group wants greater representation on key policy-making boards, saying the "Government continues to be dismissive of the strategic importance of the SME sector in Ireland".