IBEC welcomes Budget's PRSI reduction

Reducing employer’s PRSI in today’s Budget was necessary to insure employer commitment to the Programme for Prosperity and Fairness, IBEC claimed this evening.

Mr Turlough O’Sullivan, director general of IBEC, said the 1.25 per cent reduction was a step in the right direction and will save businesses about £270 million per annum.

However, he expressed concern at the 11 per cent increase in current spending. "In short the Irish taxpayer is paying 23 per cent more for services that are not significantly improved . . .and the surge in public spending is mainly accounted by pay increases."

Fulfilling commitments under the National Development Plan is crucial and Mr O’Sullivan urged the Government to divert resources and seek an earlier completion date of NDP projects because business was being hampered.

While welcoming the reduction of corporation tax to 16 per cent, Mr O’Sullivan expressed his disappointment with the return of the VAT rate to 21 per cent, which would add one per cent to inflation.

Less satisfied was the chief executive of the Chambers of Commerce of Ireland, Mr John Dunne. "Business is being forced to pay for an election year budget," he said.

"The key challenge in 2002 will be to survive the current downturn and the move to current year corporation tax payment may prove the straw that breaks the back of many small businesses," he added.

He described the VAT decision as "incomprehensible" on the same day as betting tax is reduced to just three per cent.

Reducing employer PRSI by a "miserly 1.25 per cent is laughable" when the ceiling for employee PRSI is being raised to over £30,000. Highly skilled workers and their employers are being further penalised in the Government's attempt to win next year's election campaign," he added.