REACTION TO BUDGET 2011 - The members of the Irish Taxation Institute are this morning hearing their colleagues' views on the implications of Budget 2011 for business, both from a domestic and international perspective. The €6 billion in budget savings has been variously described as humiliating, painful and stark. One critic of the budget, the ESRI's John Fitzgerald, said if more had been done on property tax and less on income tax, there would be more employment growth.
Patrick Koucheravy, an economist at estate agent CB Richard Ellis, says that due to the stamp duty changes first time buyers will see an extra couple of thousand euro tacked on to the price of their home, which may prove a deterrent to them. He says the value of capital allowances had already been low due to falling property values and the low level of transactions. He says the changes announced yesterday will simplify the system. The economist says that the frontloading of the budget 'pain' will have a big impact on consumer demand and sentiment, which has already been declining for months. He says this will have a knock-on effect on the property market.
The Irish Taxation Institute's Andrew Cullen says the new Universal Social Charge will see the health levy, the income levy and PRSI all rolled into one charge. But the move will have two phases with the health and income levies being abolished in yesterday's Budget and the PRSI move coming in next year's Budget. He says the new charge will not result in less work for tax advisors as in some ways things will get more convoluted. He says that all tax payers shared the pain yesterday with changes right across the spectrum. Mr Cullen welcomed news of the revamp for the Business Expansion Scheme, but said he wants to see the detail of the changes and approval from the European Union soon. For next year, he recommends no increase in tax rates.
Microsoft Ireland's chief executive Paul Rellis says that he was happy to see a commitment to competition in the Budget yesterday from the Finance Minister. He also welcomed news of the improved BES scheme and the three year expansion of no tax for start-ups. He says that the country's competitiveness is key to exports growth and the country can grow great talented people here as well as attracting such people to Ireland. He says his wish list for the Finance Minister next year is continued investment in education.
The ESRI's Frances Ruane says that the Budget's emphasis on income tax changes does not really stimulate any growth in the economy and says that broader tax moves, including a property tax, would have been more favourable. She says the cuts to the Taoiseach's and TDs' salaries is a good move considering the mood of the country and will work its way down to other wages, which is good for competitiveness. She says she was surprised to see nothing on water charges or property taxes in yesterday's Budget, but adds that they will be the big feature in next year's one.
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MORNING BRIEFS - On the currency markets, the euro is trading at $1.3218 cents and 84.16 pence sterling.
