“Budget 2018 has delivered the necessary increases in capital investment to promote future growth; it recognises external threats and will be mildly positive in promoting stability,” said Shannon Chamber’s chief executive, Helen Downes, on analysing the outcomes of the budget against the recommendations put forward by Chambers Ireland to which Shannon Chamber was a major contributor.
As outlined by Chamber director Ian Barrett in his opening address at the post-budget breakfast, hosted in association with Grant Thornton at the Radisson Blu hotel in Limerick, the Chambers’ main asks were focused on three areas: investing in Ireland’s future, small business and tax reform.
“We were pleased to see that many of these recommendations were included in the budget, in particular recommendations on increasing the level of capital expenditure in order to fund more infrastructure, to introduce an employee share ownership scheme and increased investment in childcare.
“We were disappointed, however, at the lack of delivery on increasing equity between the self-employed and PAYE workers and believe that the lack of change in the Capital Gains Tax (CGT) regime is a missed opportunity to further enhance Ireland’s competitiveness in the run-up to Brexit.
Describing Budget 2018 as a ‘Dolly Mixture Budget’, which was low-key and uncontroversial, Grant Thornton’s Tax Director, Billy McMahon , outlining specific measures impacting on individuals, business, foreign direct investment (FDI) and property included in the budget, said: “Employees, social welfare recipients and electric car drivers are the winners in this budget with commercial property buyers, fizzy drink lovers and permatan fans the losers.”
Guest speaker Professor Sheila Killian, Assistant Dean, Research at the Kemmy Business School described the budget as a missed opportunity to do something imaginative.
Commenting on the changes in stamp duty and the expectation of gaining €375million as a result, she said that this is based on an expectation that €10billion commercial property will change hands in 2017, whereas a mere €4billion moved in 2016/17.
“It’s a significant estimate and a bit of a concern”, she stated.
Calling on the government to fully appreciate the value of micro-enterprises to the economy, she added: “Tax and economic policy is skewed towards FDI for the big wins and misses the small stuff. Small can be beautiful yet micro-businesses are not getting the support they need.”
IMPACT OF BUDGET 2018 – Individual measures – headlines
- Standard-rate band increases €750 @20%
- USC cuts maximum value €178
- Self-employed: Increase in earned tax credit of €200 to €1,150
- Mortgage interest relief continue to 2020 (although tapered)
IMPACT OF BUDGET 2018 – Business measures – headlines
- Key Employee Share-Option Incentive Scheme (KEEP)
- Tax charge: (1) on disposal only and (2) at CGT rates
- Welcome measure for SMEs – recruitment/retention of staff
- 9% VAT rate on tourism retained
IMPACT OF BUDGET 2018 – FDI – headlines
- 12.5% rate retained
- Limitation of 80% on capital allowances/interest expense deductions against IP-related income reinstated – combat perceived threat to Irish tax base arising from recent movements of large amount of IP to Ireland.
IMPACT OF BUDGET 2018 – Property Transactions– headlines
- Revenue raise – increase in stamp duty on commercial property (2% to 6%)
- Encourage the supply side:
- Vacant site levy increase to 7% in 2nd year
- 7-year holding period for CGT exemption on property reduced to 4 years
- Restriction on destructibility of pre-letting expenses on residential property vacant for 12 months or more
Billy McMahon,Tax Director Grant Thornton,Helen Downes, Shannon Chamber, Ian Barrett , Shannon Chamber Prof Sheila Killian ,Kemmy Business school and Cillian Griffey, Shannon Chamber Skillnet at the Shannon Chamber Budget Briefing with Grant Thornton at the Radisson Hotel on Wednesday morning. Photograph by Eamon Ward