Budget 2017 measures a move in the right direction, but more needed to drive domestic economy – Deloitte
Irish entrepreneurs need more far reaching support
Deloitte comments on Budget measures on
- Personal tax
October 11 2016: Deloitte has today welcomed the positive measures in the budget to support entrepreneurs, but say there is a need for more far reaching steps to drive the domestic economy.
Commenting of the Budget overall Lorraine Griffin, Head of Tax at Deloitte, said:
“There is an air of post-Brexit budgetary caution evident in this Budget, and there are some areas that will be of concern to the business community. For example while there are some improvements in the CGT regime, the change is
not enough to really move the dial in terms of driving entrepreneurship. The measures to close the disparity between the employed and self-employed are also to be welcomed, but there is more focus required in the coming years.
“We welcome the announcement of the terms of reference for a review of the corporate tax system and its impact on investment. Such a review is imperative if Ireland is to maintain its competitiveness as a destination for foreign direct investment and if entrepreneurs are to be enabled to start and expand their businesses here.
“We would like to see an equivalent review of the personal tax regime, which has become increasingly complex, continues to be marked by high marginal tax rates by international standards, and contains a range of inequalities. A clear strategy to reduce the personal tax burden on work/earned income remains a key priority for the future.
“We would have liked to have seen greater tax relief for those investing in the SME sector, a reduction in the tax burden on the self-employed to match the rate paid by employees, and a reduction in the overall rates of CAT and CGT.”
Commenting on the aspects of the Budget relating to global mobility and employment taxes, Tax Partner Daryl Hanberry said:
“The headline measure was the reduction of the lower USC rates of 1%, 3% and 5.5% each by 0.5%. Unfortunately, the higher rate of 8% remains in place, which means that the marginal tax rate remains at 52%. This leaves us much less competitive than our main rivals in attracting talent, and does nothing to encourage the Irish abroad to move home.
“The Special Assignee Relief Programme was extended out to 2020 but no reference was made to changes or enhancements to the scheme to ensure that it operates as it was intended.
“The Foreign Earnings Deduction was also extended to 2020 and the scheme was tweaked to reduce the minimum number of days to be spent abroad from 40 days to 30 days.
“On the back of a public consultation carried out earlier this year, the Minister flagged a new share scheme which
will focus on small and medium-sized enterprises. While this is to be welcomed, it is disappointing that this will not have a wider focus and also that implementation is to be delayed until 2018.”
Mr Hanberry also noted the increased resources being made available for Revenue audits. “The increased focus on Revenue audits should be targeted at clear non-compliance rather than focussed on increasing the administrative burden for companies, given the significant amount of red-tape that already exists,” he said.
Commenting on the aspects of the Budget relating to Housing, Padraic Whelan, Tax Partner and Head of Real Estate at Deloitte commented:
“There are many people who can meet the income thresholds but are struggling to meet the deposit required on a mortgage of 80% or more. This measure will help many of them to meet the deposit. It should therefore help the delivery of new housing supply and with the approval of the Central Bank, it is one welcome measure in trying to generate sufficient supply to meet the current demand. The rebate looks like commencing from January 2017 via Revenue online so closing transactions up to Christmas will need some thought.
“The phased reintroduction of interest relief for residential landlords is "light" in terms of trying to encourage landlords to come back into the market and invest but in view of limited resources available, at least it is positive and in the right direction.”
For full details of Deloitte’s commentary and analysis on Budget 2017, please visit www.deloitte.com/ie/budget or follow @DeloitteIreland on twitter.
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