Business reaction to budget measures mixed
Moves to boost construction and hospitality welcomed while excise increases criticised
ISME chief executive Mark Fielding said today’s budget would go some way towards helping Ireland to regain its competitiveness. Photograph: Frank Miller/The Irish Times
Reaction from the business community to today’s budget was mixed.
The retention of the 9 per cent VAT rate for the hospitality sector was broadly welcomed by bodies such as Fáilte Ireland and the Irish Hotels Federation, who said the move would help to secure existing jobs in the industry and create new ones.
“Maintaining competitiveness is the single most important determinant of tourism success, and these decisions allow the industry to plan forward with confidence that the nascent recovery in tourism can be consolidated, and more jobs created,” said chairman of the Irish Tourist Industry Confederation Paul Carty.
Measures to boost the construction industry were also well received.
The Construction Industry Federation said the Government had announced several measures which would boost jobs, including the €200 million stimulus package for capital projects from the lottery licence, a €30 million State house building programme, and a €10 million fund for unfinished housing estate initiatives.
“The foundations for the recovery of our industry have been set in this budget and this will help bring extra confidence, extra activity and most importantly, more construction jobs to our sector,” CIF director general Tom Parlon said.
The Society of Chartered Surveyors in Ireland welcomed the tax incentive which would allow homeowners to reclaim VAT on completed renovation jobs worth between €5,000 and €30,000, saying it would support legitimate businesses in the construction sector and help to improve standards.
The Irish Small and Medium Enterprises Association (ISME) were critical of the €5,000 minimum spend, however, saying it would “continue the nixer culture below that level”.
One of the most widely criticised measures introduced in Budget 2014 was the increase in excise duty on alcohol and tobacco products.
Alcohol Beverage Federation of Ireland said the second consecutive year of excise increases on beer, wine and spirits “will be bad for jobs, bad for growth, and will damage an important domestic sector”.
ABFI director Kathryn D’Arcy described the increase as a “short-sighted” move which would damage employment in several industries.
“The effects of an 18 per cent increase in excise on beer will be felt by Irish farmers; the 15 per cent increase in excise on spirits will damage Ireland’s export sector; and the 15 per cent increase in excise on wine will be damage our international competitiveness as a tourism location,” she said.
While the lower VAT rate will have a positive impact on publicans, the excise increase on alcohol could lead to pub closures and the loss of up to 2,000 jobs across the country, according to the Licensed Vintners Association chief executive Donal O’Keeffe.
“This increase flies in the face of the Government’s stated objective of stabilising the domestic economy and promoting jobs and growth,” he said. “This move will have precisely the opposite effect on the pub sector. It is the second successive Budget we have seen a substantial excise hike in an environment where the pub sector is under huge pressure.”
He said that while retail sales had fallen 12.5 per cent across the board over the past six years, the pub trade had seen a decline of 33 per cent, and publicans “cannot understand why excise rates are being hiked again”.