A Budget that rewards those who contributed most during recession
AS with many other commentators on this Budget, I struggle to find measures that could be regarded as game changers, or even highly controversial.
It seems to me to be more like a Budget where there is a little bit of something for everybody, and the more that I reflected on it, the real story is the Budget itself rather than individual measures.
In the difficult days of 2008 and 2009, we wondered what was going to happen to this country, given what seemed to be an insurmountable level of debt and economic stagnation.
However, all parts of society in this nation contributed to what has been an incredible national recovery effort. Some parts of society have suffered a greater burden than others and many were unwilling victims of the financial pain which ensued. That said, as a nation we pulled together - and while there were many difficult times and frictions in our society, we did not see some of the outcomes experienced in other jurisdictions such as a swing to extremist political parties, rioting, ATM queues and bank lockouts.
In Ireland today, we are in an enviable position, in which we have not only restored our international reputation, but, I believe, we have also greatly enhanced it by confronting the economic challenges head on.
Budget 2016 has fully recognised this and has begun a process of rewarding those who have contributed most during the previous number of years, and those who have assisted the economic recovery. This cuts across all sectors of society. In particular, key favourable changes include:
÷ Cuts in Universal Social Charge (USC) from 2016
÷ Changes to PRSI that will benefit low-income earners
÷ Postponement of the revaluation date for the Local Property Tax to 2019
÷ An undertaking to abolish the USC and to reduce the marginal rate to no more than 50pc, as resources become available
÷ A range of measures designed to assist and encourage greater entrepreneurship
÷ A new farmers' partnership model to assist with succession planning and other improvements to Capital Acquisition Tax
÷ Several measures aimed at supporting the retail sector to reduce costs and incentivise electronic payments.
This is not a Budget about big business and the absence of any key changes in corporation tax is noticeable.
The one exception to this is the announcement about the introduction of the first OECD-compliant "Knowledge Development Box" which is to be welcomed, as this will lead to greater focus on innovation and research and development in this country. In turn, this will result in the creation and retention of quality jobs. However, to enhance the theme of all parts of society working together for the greater good, there are business taxation changes which the Finance Minister might consider for the Finance Bill and for future budgets. This would include greater Capital Gains Tax measures to encourage entrepreneurship or to encourage private Irish companies to list on the Irish Stock Exchange, greater R&D incentives and measures to incentivise employees to participate in employer share schemes.
Whilst this Budget rewards various groups who have felt the hard pinch over recent years, it is important to recognise the importance of society working together as a whole to ensure economic prosperity for all.
In conclusion, Budget 2016 should go the distance in helping to put back into the pocket of those who have been severely hit over recent years. However, it is essential that we continue to invest in innovation and encourage entrepreneurship as the backbone of our economy - in my view, these are areas which still require further improvement to ensure that Ireland remains a leading light in the global economy.
Mike Hayes is a partner at KPMG