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| VAT Increse will Kill Consumer Demand - SFA |
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By
Ian Martin, Chairman Small Firms Association
Dec 6, 2011 |
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- Budget 2012 measures will broadly support small business development
- BUT VAT increase will kill consumer demand
- Lost opportunity to encourage new start-ups by providing welfare safety net
The Chairman of the Small Firms Association, Ian Martin, has said that “Budget 2012 contains many welcome measures that will support small business establishment and development.” Specifically he welcomed the extension of the corporate tax break for start-ups to 2014, the foreign earnings deductions to support companies entering emerging markets and the improvements to the R&D tax credit scheme.
However, Mr Martin strongly condemned the 2% increase in the higher rate of VAT, as killing off consumer sentiment further. “Whilst in the tax hierarchy, it has less of an impact on economic growth than corporation tax and income tax; the choice should have been the introduction of domestic rates and a broadly based private property tax, which is the area where Ireland is most out of line with tax policy across the developed nations. As the VAT tax take is dependent on consumption, there is no guarantee that it will raise the tax revenues the Government expects. The Government needs to do more to improve consumer sentiment and encourage spending to order to restore domestic demand.”
Mr Martin also criticised “the lost opportunity that the Government had in this budget to encourage more unemployed people to get off the live register by becoming self-employed or establishing small businesses, through allowing them to have the same social welfare blanket as employees have by allowing them to give a voluntary PRSI contribution. We must make it easier for people to create a job for themselves”.
Mr Martin welcomed the announcement that there would be no passing of the social welfare sick pay cost onto employers which would have cost employers €150mn and would have had a devastating effect on small businesses. He also welcomed the announcement that NAMA is willing to negotiate rents on properties it owns that have upward only rent reviews. “As NAMA is now such a major property owner, this will make a real difference. However, further pressure must be put on those landlords in the private sector, who have so far refused to negotiate, and are putting businesses and jobs at risk.”
Mr Martin concluded: “It is vital that the Government now moves from prioritizing austerity compliance and implements real policy changes to promote growth. The 200,000 small businesses employing 655,000 people will be key to our national economic recovery.”
Ian Martin,
SFA Chairman,
Confederation House,
84-86 Lower Baggot Street,
Dublin 2;
Tel: 01 6051500
Email:info@sfa.ie
Web: www.sfa.ie
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