Business groups broadly welcomed the Budget, particularly the move to take the lower-paid out of the tax net and to reduce corporation tax. However, there was strong criticism of the proposal to increase the ceiling for employers' PRSI.
The standard corporation tax rate was cut by four percentage points to 28 per cent and the amount of annual profit on which the lower 25 per cent rate will apply will increase from £50,000 to £100,000.
Employers' lobby group IBEC said the Budget will improve the incentive to work, improve living standards and significantly reduce the numbers paying tax. It also said there can be "no justification whatsoever" for any remaining pay settlements to exceed the terms set out in the agreement.
IBEC welcomed the proposal to improve child-care facilities, which it said removes another impediment to going to work. It said against this background it was difficult to understand the sharp increase in the ceiling for employers' PRSI.
"This discriminates against the manufacturing sector, which will have no benefit from the corporation tax changes, but which will in a number of individual cases be severely hit by this PRSI ceiling adjustment," it said.
The Small Firms' Association said increasing the employers' PRSI ceiling by £4,500 to £35,000 was "beyond belief" and not in keeping with a high-skilled, highearning economy. SFA chairman Mr Kieran Crowley said the decision must be seen as a "sop" to the trade unions for reductions in corporation tax. It said the measure will hit small firms hardest.
ISME, the small firms' lobby group, said it was broadly supportive of the Budget, but also criticised the expansion of employers' PRSI which it said will predominantly hit owner-managed businesses. "The expansion of the band at which the lower rate of corporation tax is paid does nothing for existing small businesses," it said.
The organisation welcomed the Government's initiatives on providing tax incentives for Park and Ride, and not subjecting employees' bus/rail passes to BIK tax. It also said it welcomed the provision of £12 million towards the provision of a high-capacity Internet link into Ireland.
The Association of Chartered Certified Accountants in Ireland welcomed the tax changes and the Minister's commitment to introduce Save As You Earn Schemes and to allow the self-employed to contribute more towards their pensions.
The Institute of Certified Public Accountants in Ireland welcomed these measures. It praised the decision to widen tax bands and increase tax allowances. The Irish Tourism Industry Confederation said while the Budget did not refer specifically to tourism development "the industry generally will see this as a positive Budget". The Vintners' Federation of Ireland, which represents 6,000 publicans, was delighted there had been no increases on tax on alcohol.