Businesses across all sectors of the economy are hopeful that the forthcoming Budget 2027 will provide welcome news. While the large multinational sector has generally enjoyed the benefits of a very supportive tax regime in recent decades, many small and medium-sized indigenous businesses are struggling by contrast and are hopeful for some relief in the ministerial announcement.
The big winner in last year’s budget was the restaurant sector with the reduction in the rate of VAT to 9 per cent. The capacity of the Government to respond to hard lobbying by this under-pressure sector should provide encouragement to others.
In the cross-section of businesses The Irish Times spoke to, one area where there is almost universal consensus is that rates of personal taxation are too high. While there are wide expectations of a move on widening tax bands so that workers can earn more while staying outside the 40 per cent income tax band, many believe that social taxes such as USC and PRSI are too high and provide a disincentive to work.
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Energy costs were another recurring theme, especially in high consumption sectors such as transport and hospitality. While there is recognition of the need to move to a low-carbon economy, businesses feel that an undue portion of the burden is now being placed upon them.
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Matt O’Connor, managing director, Mullingar Park Hotel
Hotelier Matt O’Connor, who is also president of the Irish Hotels Federation, believes the burden of income tax is too high on people earning average wages. He says the combined effect of the social taxes of PRSI and USC, along with auto-enrolment, takes far too much out of wages in the labour-intensive hospitality industry, among others. “Take USC, for example. That was supposed to be a temporary tax, that was introduced by the late Brian Lenihan at the time of the economic crisis. The crisis has long passed. Nama [national asset management agency] has been wound up. Why are we still asking people to pay this tax?”
He points out that a waiter earning €16 an hour or €640 a week will still face very significant reductions in their wage packet from social taxes even if they don’t pay PAYE. While adjusting the level at which people enter the higher rate of tax in the budget will be welcome, the net reduction in the amount of tax paid every week will be very small in the context of the increased cost of living.
O’Connor would like to see the reintroduction of some form of tax incentives for development of rural hotels that would be “targeted, measured and time limited”. He would also like to see the introduction of a national hotel retrofitting scheme.
Micheal Briody, managing director, Silver Hill Duck
The award-winning duck producer employs 245 people in Monaghan and processes more than four million ducks annually, with more than 70 per cent exported. Managing director Micheal Briody hopes that the much-speculated easing in personal income tax rates, through widening the bands, is delivered in the budget.
“The income tax system in Ireland does not incentivise work. A lot of our people don’t want to work beyond certain hours because they will be taxed at over 50 per cent when you consider PAYE, PRSI and USC. Employers’ PRSI has also increased steadily over the years, so when you take that into consideration, the cost of giving someone a decent net wage is too high.”
Briody also says that the loading of carbon taxes on business to promote the climate change agenda is unfair, given that the grid currently doesn’t have the capacity for the amount of electrification required. He believes that businesses that have a plan to move in this direction, but who are constrained by grid capacity, should not be penalised.
Shane Bourke, managing director, Clearspace
Shane Bourke, whose company provides serviced offices in Dublin city centre, says the biggest move that would help him as a business owner is a reduction in capital gains tax. Rates climbed by over half to their current level of 33 per cent at the time of the economic crash.
“Business owners take the risk of starting out on our own. We employ people, we contribute to their PRSI and their pensions, and we’re often the last ones to get paid. So, when you do eventually sell your business, getting hit with 33 per cent tax [after entrepreneurs’ relief] on that sale is a hard pill to swallow. If it was reduced, I think entrepreneurs would put more of our own money into companies, because there’s a better reward at the end. That has a knock-on effect of creating more jobs, which, in turn, grows the economy.”
He would also like to see easier, more efficient ways for start-ups and scale-ups to borrow money. Bourke says that access to bank funding is difficult and time-consuming for even relatively small sums.
Third, he says anything that could be done to tackle energy costs or business rates would be helpful. “Business rates relief that used to apply to empty floors while you fit out a building disappeared about two years ago, post-Covid. Bringing something like that back would genuinely help affordability”
Ger Hyland, managing director, Hyland Transport
Haulage company owner Ger Hyland, who is also president of the Irish Road Haulage Association, is looking for urgent support for the sector in the forthcoming budget, which he says faces existential threats. The average age of truck drivers in Ireland is approaching 60, and there are few recruits to the industry. What was once a high-turnover, low-margin business with 3-5 per cent returns is now a no-margin and, for many, a loss-making industry, he says, highlighting the vital role the sector plays in the wider economy
“All of the imports and exports go on the back of a truck. If the transport industry collapses, so will the Irish economy.”
The sector has paid a very heavy price in carbon taxation, Hyland says, and with diesel-powered vehicles likely to be the dominant mode of transport for some time to come, independent Government assessment by Indecon identifies hydrotreated vegetable oil as the only immediately scalable decarbonisation option for heavy goods vehicles. Among the budget suggestions from the sector are a rebate scheme to encourage adoption of this fuel as well as a biofuel rebate scheme linked to the renewable component of blended diesel.
Eoghan Powell, innovation centre director, WorkIQ, Tallaght
Eoghan Powell says access to capital is one of the biggest issues for prospective entrepreneurs deciding whether to start a business. “We’ve seen other countries, like France and the UK, unlock huge amounts of private capital through pension funds and insurance via budgetary measures, and that’s something we should be looking at here too. Our EIIS [Employment and Investment Incentive Scheme] scheme needs reform. Very few funds are using it, because it’s expensive and difficult.”
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Share options are another one that comes to mind. “The Keep [Key Employee Engagement Programme] scheme we’ve got here just isn’t competitive. As a country, we’re shooting ourselves in the foot on that one.”
Eamonn Stapleton, managing director, Clonmel Enterprises
Clonmel Enterprises is an SME civil engineering firm engaged in local authority projects improving sustainable travel in urban environments, enabling greenfield sites for housing delivery bodies, and site enabling for private housing schemes.
Managing director Eamonn Stapleton cites the Construction Industry Federation’s pre-budget submission, which identified five key pillars which are interdependent. These include State investment in skills and workforce development, green and digital transition, and competitiveness and productivity measures which will enable improved project delivery, increasing infrastructure and housing output.
“The industry requires a larger workforce as Ireland increases housing, transport, energy and water infrastructure ambitions. Greater State investment in Stem education, technical training and apprenticeships, alongside targeted use of the National Training Fund, is critical.
“The sector is committed to Ireland’s climate objectives, but the transition must be practical and achievable for construction. We would welcome investment in research into reuse and repurposing of excavated materials on sites, soils and aggregates.”
