ISME, the Irish Small & Medium Enterprises Association has described this week’s Budget as savage and a missed opportunity, which will do nothing to stimulate enterprise or assist in maintaining employment.
In a hardhitting statement, it has hit out at what it said was a golden opportunity to create a better environment in which Irish business could prosper and it accused the Minister for Finance, Brian Lenihan, of ‘bottling it.’
The Association outlined its concern that taxation measures dominated as opposed to introducing significant cuts in current expenditure.
In a statement, it said that while tax increases were inevitable, the actual level of increases is worrying, raising concerns about the impact this will have on labour costs and consumer demand.
“The announcement of a doubling of the income levy, together with the significant hike in the health levy and the increase in the PRSI ceiling, will influence the cost of labour and could potentially lead to more redundancies. The Minister should realise that you cannot tax your way out of a recession, only trade your way out of it.
“By increasing excise duties on diesel and increasing the insurance levy, the Minister has failed to grasp the impact that higher business costs have had on SMEs, with many companies struggling to keep their heads above water, in the face of rising costs,” the statement said.
“In fact no action has been taken to address cost competitiveness, with nothing new announced to tackle increasing local charges and energy costs, a significant impediment to SME businesses.
“The Minister ‘bottled it’ and utterly failed to address current expenditure, in particular the public sector element. This represents a significant lost opportunity. With tax revenues now at 2002 levels, there was scope to once and for all address the cost of the public sector and in particular the pay element.
“The Minister took the ‘easy and wrong’ option, by once again delaying decisions on this huge element of current expenditure. The early retirement and career break initiatives are cosmetic and will have little impact in reducing the significant cost of the public sector.
The body went on to say that with unemployment doubling in the last 12 months, no initiatives were introduced to assist enterprises to maintain employment.
“With the costs of Social Welfare increasing dramatically it would have made economic sense to ease the cost of labour for business and introduce incentives to keep people in work.
“The establishment of a national asset management agency is a welcome development if it stabilizes the banking sector and re-establishes lending to businesses.
The Association also welcomed the announcement to introduce multi-annual budgets, but was disappointed with the vagueness of the policies proposed over the next number of years.
“Overall, we are extremely concerned and disappointed that little has been done to protect businesses and jobs, with nothing whatsoever to restore competitiveness, key to establishing future growth.
“There has been far too much emphasis on increasing taxation and not enough on reducing current expenditure. This is a mistake, which potentially may come back to haunt us over the next number of months and years,” it concluded.
