Joy for wage slaves, but we've still got a Soviet-style regime for risk-takers
The focus on entrepreneurs is welcome, but it’s far too small to make much of a difference, writes Nick Webb
The Budget focus on entrepreneurs and small business is welcome but not exactly substantial. The discrimination against people who risk everything - maybe even mortgaging the family home - to try to get a business up off the ground remains something better suited to pre-Gorbachev Russia.
That job and wealth creators are considered less worthy of tax relief than timeclock-punching PAYE workers renders the claim that Ireland is the best small country in the world in which to do business an empty soundbyte. Measures to cut CGT, bring in an initial €550 tax credit for the self-employed and make very focused but minuscule tax breaks for some industries mean that things are better than they were yesterday. But only very marginally.
The CGT cut is a disappointing fudge and will have almost zero impact as it only applies to chargeable gains of €1m or less. The rise in asset values mean that this cap will need to be raised substantially to have any effect. "While the reduction in Capital Gains Tax is a welcome move in the right direction, it remains uncompetitive when compared to the UK, where a 10pc CGT rate is levied on gains of £10m," according to entrepreneur and Netwatch founder David Walsh.
There may have been a smarter way of doing this. "A form of roll-over relief for entrepreneurs, whereby CGT is deferred until the replacement investment is disposed of, could have been more effective in encouraging reinvestment by serial entrepreneurs," according to EY's Audrey Lydon. The €550 tax credit for the self-employed won't encourage anyone to launch a start-up. Tweaks for other industries, such as brewing, film, retail and the "man in a white van", were no harm. But that's all they were. Tweaks.
One of the major issues facing business is the skills gap. Attracting talent from abroad is a key part of our recovery play, with plans to lure about 70,000 of the diaspora home. Cutting personal tax is a big help here. "The Budget reductions on USC will make Ireland more attractive for candidates, especially nurses, thinking of relocating here, but the benefit will have less impact on higher paid consultants who we are also trying to attract here," said TTM Healthcare boss Brian Crowley. However, the personal tax rates are still far too high.
"For me, the tax measures miss the key issues, the entry point of the tax system and top rate compares with other countries but the rate at which it kicks in is much lower. Top rate tax should be for top earners, but in Ireland it's for middle-income earners and this unfair burden remains," adds eNet boss Conal Henry.
Business costs will also rise because of the 6pc hikes in the minimum wage as well as the introduction of two weeks of paternity leave. Small businesses will have to find ways of covering those new bills, so there will be an increase in the price of goods and services. Your post-match burger won't be as cheap.
Car salesrooms, high street retailers and the hospitality sector will get the biggest bounce. The extra €1,000 in the back pocket of middle to high earners may go towards a 2016 BMW 7 series, a splurge on a Nespresso machine or the eight-course "Degustation" menu in Restaurant Patrick Guilbaud. Consumer spending this Christmas will be the highest since the pre-crash years. With 400,000 people working in retail, wholesale and the accommodation or food service sectors, it's a strong indirect job creation stimulus package. Next year, around 46,000 new jobs will be created, pushing total employment past the two-million mark. A good Budget for wage slaves... just an okay one for their bosses.