On the eve of Budget 2015, Kehlan Kirwan looks at what SMEs should look out for in Finance Minister Michael Noonan’s speech.
Tomorrow will see the Michael Noonan set the financial plan for Ireland for 2015, and from the outside, it looks as if it may generally be one with a positive tone (as positive as an austerity budget can be).
While all the talk has been of tax cuts, the real incentive has to be jobs. The tax cuts for the lower and middle-income earners are moot, thanks to Irish Water coming in at the end of the month and the price of utilities continuing to climb. People will still be hesitant to spend.
However, Ireland’s economy is looking at a growth rate by year’s end of 4.5% to 5%, astounding figures considering where we were just two years ago. So businesses are feeling a little bit more confident, but still wary that challenges still remain.
PRSI and the USC may find small cuts, while Vat is expected to remain at 9%. Early last week, Siptu asked the Government to increase the Vat rate for the hospitality industry as “the benefits had not been passed onto the consumer”. However, the industry has long argued that the move has led to tens of thousands of part and full-time jobs. The move was without doubt positive.
It brought people back to work and brought more money into the tax bracket. A small example of why Ireland’s tax-take has given the Government more room to manoeuvre in this budget. So ultimately we need as many people as we can to be working, and this year’s budget needs to reflect that. How to get businesses to hire needs to be the question at hand.
The Government is also expected to lay out its financial planning for the next three years. Publicly, this is to allow people to see what is happening over the next number of years. Reading between the lines though, we see that next year’s budget will be the last one before a general election and the Government is keen to make these budgets count before the polls.
Currently, we seem to be a roll; growth forecasts are up, tax-takes are up and unemployment is slowly coming down. This budget needs to reinforce those trends and provide SMEs with real opportunities to grow. This is the first austerity budget which has, however small, seen something given back to taxpayers. That in itself is a big boost to workers and business owners.
The elephant in the room of course is that Ireland as whole still needs to pay its bills, whether we like it or not. Ireland is still racking up over €18,000 of debt per minute and we are still borrowing to make sure the country is still able to function. So we are still going to see more cuts. Where those cuts happen will decide what kind of a year 2015 will be for Ireland’s SMEs.