Tax changes ‘will have negative impact’

CHANGES in Capital Gains Tax will bring in an extra €250 million next year, boosting the Government’s coffers.

But industry sources aghast at some of the Minister for Finance’s moves warn the minister is postponing tough decisions.

The Institute of Chartered Accountants warned that many of the measures in the Budget were anti-business.

Institute of Certified Public Accountants chief executive Eamonn Siggins said: “Budget 2003 has done no favours for the competitiveness of Irish business in a year when many businesses have been impacted by the global market slowdown”.

He warned that the changes in Capital Gains Tax, Capital Allowances and VAT will “all impact negatively on business”.

Those changes combined will extract a huge contribution from business of 300m by 2007 against 20m in 2003.

Any company thinking of investing in new premises or new plant and machinery “will think again” in the light of yesterday’s Budget, he said.

As far as both ISME and the SFA, the two bodies representing Irish industry, were concerned the Budget was “anti-business”, ISME warned.

Meanwhile IBEC paid the Government a back-handed compliment.

Director general, Turlough O’Sullivan, expressed relief at the tough stand taken on spending, but said the minister was two years too late.

Construction Industry Federation director general Liam Kelleher accused the minister of being “over cautious on borrowing”.

Mr Kelleher said the minister should have borrowed another 600m for investment purposes.

That would have pushed up borrowing to 1.2% of GDP instead of the 0.7%, but would still have been well within European guidelines.

For the CIF the Budget was “more negative than positive because the minister has taken a lot of out of the business sector”, said Mr Kelleher.

The implications of stamp duty on non-residential property was a specific concern and he warned that the VAT increase to 13.5% had serious implications for the hotel sector.

Keeping in tune with the sombre mood Ford Ireland chairman and managing director Eddie Murphy said that the imposition of VRT on cars over 1900cc was a “myopic and misguided manoeuvre on the minister’s part”.

Beamish & Crawford managing director Alf Smiddy said the minster did well to leave beer alone.

It is already one of the highest taxed sectors in any western economy, he said.