The Irish Small and Medium Enterprises Association (Isme) has called on the Government to increase the ratio of expenditure cuts to tax increases in Budget 2013.
In its pre-budget submission Isme said fiscal consolidation and austerity has had a more negative impact on economic activity than originally envisaged and urged the Government to implement a 75:25 ratio of expenditure cutbacks to revenue raising measures instead of the proposed 65:35 ratio.
The organisation said the “overall magnitude” of Government expenditure was unaffordable in the long or short term. Increased taxation, it continued, would cause greater damage to businesses than spending cuts.
“It would be more appropriate to focus more heavily on reducing current expenditure,” ISME chief executive Mark Fielding said.
He called for cuts to public sector perks and allowances, universal payments and the public sector pay and pensions bill. He also said Ireland’s social welfare bill was too high.
“Government needs to be brave in addressing these issues and remain focused on the fact that growth and employment creation are the two things that the economy now needs more than anything else,” he said.
ISME called on the Government to reduce business costs, including commercial rates, rents, labour costs and transport costs.
The organisation joined the Institute of Directors and business lobby group Ibec in urging the Government not to change PRSI or sick pay schemes. A statutory sick-pay system could see employers bearing the first few weeks of employee sick leave.
Mr Fielding said the Government should develop a strategic investment bank to introduce competition and open other sources of finance to small and medium businesses.
The organisation said the Government should “recognise the contribution that entrepreneurs make to the economy of Ireland and incentivise them accordingly in this year’s budget.” It added that the self-employed should be able to avail of social welfare entitlements immediately.
In a proposal which would “kill two birds with the one stone” Mr Fielding said tax incentives should be offered to home owners who use verifiable trades people. This, he claimed, would tackle improvement of housing stock and the issue of black market operators.
“Legitimate traders are being rifled at the moment by fellows with which vans and yellow number plates,” he said.
