Budget 2017: SFA: Brexit-proofing claim is ludicrous
In particular, the claim by the Government that this budget is somehow ‘Brexit-proofing’ our economy is ludicrous. It fails entirely to recognise the fact the UK is already significantly more tax-competitive than Ireland with regards to starting and running a small business, and we need immediate changes just to get back on a level playing field.
Making our tax system competitive with the UK in areas such as capital gains tax (CGT) and employee share options must be done today, not in a years’ time. The Department of Jobs, Enterprise, and Innovation has, at least, received a 10% increase in its budget allocation, and we need to ensure a portion of this funding goes to our hard-hit exporters, who are facing a currency crisis greater than anything we have ever seen.
The devaluation of sterling has wiped out profit margins, and the Government must intervene if we are to prevent job losses. The reduction of the cCGT rate for entrepreneurs from 20% to 10% is welcome, but the retention of the lifetime limit of €1m will severely limit the impact of the change. Along with these improvements in CGT entrepreneurial relief, CGT should have been decreased to 20% across the board. This measure would actually have been self-financing and is a lost opportunity.
Budget 2017 represents a further modest step in the right direction in the SFA’s long-fought battle for risk takers and job-creators in the economy to be treated equally by the tax system. The €400 increase in the Earned Income Tax Credit for the self-employed felt short of the €550 we had anticipated, but the Government has committed to full equalisation with the PAYE tax credit in Budget 2018.
In addition, we will continue our campaign to abolish the additional 3% USC that applies only to the self-employed, and to see the introduction of a social welfare safety net for self-employed. The Government needs to be more ambitious in its capital investment plans across essential infrastructure and must lobby the EU to change the fiscal constraints on us.
Patricia Callan is director of the Small Firms Association.
