THE Budget was a "slap in the face" for small businesses, according to the Small Firms Association chairwoman, Ms Lorraine Sweeney. While the Minister for Finance has acknowledged the small business sector's success in creating jobs in the economy, Ms Sweeney said, his Budget did nothing to reward entrepreneurs.
Reductions in corporation tax would mainly benefit big businesses and would not make a difference for the smaller business sector, she said.
The SFA was disappointed the Minister did not widen the threshold above which small businesses - could benefit from the low rate of corporation lax. The rate of 28 per cent would still apply to profits of up to £50,000. In the UK, Ms Sweeney said, companies paid corporation tax rates of 23 per cent on profits of up to £100,000. "Clearly we still have a long way to go here."
On the positive side, however, lower personal tax rates and wider personal allowances should encourage more people to take up work in the economy, she said. Also, proposals to allow start up companies to offset pre trading expenses was a welcome measure.
The Irish Small and Medium Enterprises association said last night many of the single issues in the Budget were welcome and positive.
But, despite reductions in income tax rates, it said the Government had failed to reduce its reliance on income lax revenues to fund Government spending.
The association said it was concerned that the Minister for Finance, Mr Quinn, could not give a definite commitment to reduce these levels to 10 per cent of tax revenues over the lifetime of Partnership 2000.
At very least, the Minister should have removed the anomaly in the tax code which withholds the standard PAYE allowance from proprietary directors, according to ISME.
The Irish Exporters Association welcomed the reductions in corporation tax, the widening of the income tax bands and the reduction in PRSI, saying it should improve Ireland's competitive position.
"While the reduction in corporation tax will help exporters, services and is a step in the right direction, the rates are still considerable higher than those of our competitors in the international services market" according to the IEA chief executive, Mr Colum MacDonnell.
He also warned that increases in excise duty rates on petrol and diesel would impose extra costs on business. The IEA said it was also disappointed that the Government failed to take steps to reduce the national debt, particularly at a time when the economy was enjoying strong economic growth.
"Recent movements in European exchange rates have meant a windfall for the Government - a windfall paid incidentally by exporters to Europe, and the association believes such gains should be applied to fund trade promotion programmes in Europe and to reduce the national debt, and note given away in an election year budget", Mr MacDonnell said.
Dublin Chamber of Commerce welcomed reductions in employee's PRSI as a significant measure to stimulate employment growth.
The chamber's pre Budget submission had proposed the phased elimination of employees' PRSI as, the best means of stimulating employment. "The Government should now aim to eliminate this tax by 1999", according to the chamber's economic director, Mr Declan Martin.