Firms give positive reaction

BUSINESS overall would have to dig deep to fault the minister’s seventh Budget and the reaction overall has been positive.

Though the reaction for a wide variety of business interests generally confirms that view, small firms’ representative body ISME being a significant exception.

By extending the Business Expansion Scheme for another three years, the minister has ensured the continuing availability of critical seed funding for indigenous business.

By expanding the amount exempted from tax to 1 million from 750,000 the minister has also broadened the scope of such initiatives to attract more funds for individual projects.

The Irish Business and Employers Confederation said the Budget was to be welcomed because fundamentally it did nothing that would adversely impact on the ability of business to compete or expand and would have little impact on inflation.

And the measures taken in relation to BES, film etc., were all positive moves, it said.

Critical to the future of business in the years ahead is the need for research and development.

In the Budget The exemption for disposal of substantial shareholdings in trading subsidiary companies from capital gains tax and expansion of double taxation relief provisions for dividend income paid to parent companies in certain cases should encourage multinational corporations to locate regional headquarters here, said consultants KPMG.

It welcomed the tax credit for incremental R&D as a further fillip to investment in industry.

Where spending in a year is greater than 50,000, up to 20% of such expenditure will be permitted to be set against corporation tax in any given tax year.

There is a concern, however, that because of our low corporation tax it may not get past the EU Commission because it could be viewed as giving us unfair competitiveness.

The American Chambers of Commerce in Ireland were totally supportive of the moves, adding that they would significantly enhance Ireland’s status as an important location for US inward investment in the years ahead. Boosting R&D is a major issue this Government has been trying to address, with nearly 600m allocated to supporting and extending the scope of activity through Science Foundation Ireland. If there is criticism of the Budget, economists such as Dan McLaughlin of Bank of Ireland and Alan McQuaid of Bloxham Stockbrokers argue the minister could have spent substantially more on infrastructure if he had the imagination to make that leap.

The Construction Industry Federation has also been critical for that reason. It complains the Government has gone back on its own commitment to keep capital spending at 5% of GNP in the years ahead.

However, CIF director general Liam Kelleher was still positive about the overall package presented to the Dáil yesterday. While the CIF has its concerns, including the 9% top rate of stamp duty and the development costs under the Local Government schemes, Mr Kelleher said the Budget was good for the economy overall.

He said the multi-annual budgeting on the capital programme was a major step in the right direction.