Business hails ‘responsible and prudent budget’

IRISH business broadly welcomed yesterday’s 2008 Budget, describing it as a measured response to the changed economic circumstances facing the country and the economy.

Turlough O’Sullivan, director general of the employers’ body IBEC said: “This is a responsible and prudent budget. The right thing to do now is to maintain the delivery of the National Development Plan in its entirety and to substantially rein in day-to-day spending by government.

“The budget does this. The Irish economy is fundamentally sound. As it rebalances, it is especially important that businesses in Ireland can sell their goods and services overseas.”

On the building front the Construction Industry Federation, headed by former PD junior minister in the last government, Tom Parlon, was critical of the Government’s failure to cut the 9% rate of stamp duty on commercial property deals.

Last year, Irish people sank a massive €12 billion into commercial property but the vast bulk of that went on overseas ventures, with just €1.5bn invested here.

“CIF is disappointed that the minister chose not to extend the reform of stamp duty to commercial transactions,” said Mr Parlon. The 9% top rate of stamp duty was a significant factor in this, particularly given transaction costs are significantly lower elsewhere, he said. However, he said the reform of stamp duty on domestic property and the commitment to increase spending on infrastructure were very welcome.

“This is a positive move by the minister and one that, in conjunction with other developments and the good value now in the market, should help to re-activate transactions and also help keep investment in Ireland. The measure should also ensure additional revenues for the State next year from the property and construction sector,” said Mr Parlon.

There was “a very strong logic for stamp duty reform” and the move had also been supported by many of the country’s leading economists, he said.

The housing market had stagnated over the past year and “people were unwilling to pay the existing penal rates of stamp duty for moving home”, he said.

Pat McCardle, chief economist Ulster Bank, questioned whether the enthusiasm shown for the budget was merited.

The experience of the last few years has shown that the Government failed to reach its targets on the National Development Plan.

Based on past experience that risk still remained, he said.

“The stamp duty changes were the surprise element in the budget, though the minister had let the cat out of the bag overnight.”

While the changes have been generally welcomed on all sides, Mr McArdle questioned how critical they will turn out to be in the year ahead.

The stamp duty changes were “more conservative than they might have been and we are left wondering if they will have a major impact”, he said.