ISME condemns ‘savage’ budget

The association also expressed concern that taxation measures dominated the budget, as opposed to the introduction of significant cuts in current expenditure.

While tax increases were inevitable, the actual level of increases is worrying, ISME said, and highlighted its concerns of 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, according to ISME.

“The Minister should realise that you cannot tax your way out of a recession, only trade your way out of it,” ISME said in a statement.

“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.

“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 association said.

ISME assessment of today’s budget was that the Minister for Finance, Brian Lenihan TD, “bottled it”, and utterly failed to address current expenditure, in particular in the public sector, which 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,” ISME said.

However, the association cautiously welcomed the establishment of a national asset management agency, “if it stabilises the banking sector and re-establishes lending to businesses”.