Budget 2012 Must Close the Deficit While Supporting Growth

Wexford Chamber together with Chambers Ireland has said that the core focus of Budget 2012 must be to secure economic recovery, restore confidence and enhance competitiveness in order to support jobs and enterprises.

Madeleine Quirke, Wexford Chamber Chief Executive said, “Ireland is currently demonstrating the economic truism that small open economies are hit earliest and hardest in recessionary times but that they can emerge quicker and stronger than their larger, more closed economic counterparts. To support our return to growth we must enhance flexibility, support adaptability and close the gap in the national finances as soon as possible.”

“In order to tackle the budget deficit, any adjustment must be at least 75% derived from cuts rather than tax increases. This is supported by a recent survey of Chamber Members where 81% of respondents signalled that budget adjustments should be achieved through cuts. Those cuts that must be made should happen now if we are to achieve financial sustainability and confidence within the wider economy. If tax increases are unavoidable then they must be the result of broadening the tax base to avoid doing more damage to the currently challenged domestic economy.”

“The Government faces a twin challenge of maintaining growth while also working towards achieving balance in the national accounts. Restoring the national finances will deliver enhanced confidence and greater levels of economic activity. This in turn will speed up the flow of money, increase the Government’s tax take and drive growth. All of these requirements will arrive sooner if we can close the deficit in a timely manner.”

“There is still a lot that the Government can do to support businesses. These include:

No VAT Increase: This will help to support the struggling retail sector and jobs and enable retailers to restock and expand.
Implement Recommendations of LGERG: The recommendations of the Local Government Efficiency Review Group (LGERG) should be implemented immediately and the savings achieved should be passed back to the business community in an appropriately targeted way;
Simplify the Seed Capital Scheme: The Seed Capital Scheme (tax relief scheme) is not promoted enough to potential entrepreneurs and the qualification criteria should be simplified in order to help more people start their own business;
Labour Market Reforms: The labour market reforms outlined by Minister Bruton during the summer must now be fast-tracked in order to help prevent further unemployment and ultimately create favourable conditions for job creation in impacted sectors; and
Reduce Employers PRSI: Proactive measures must be taken to support and incentivise employers to take on new staff. This could be achieved through a further reduction in the current rate of Employers PRSI and the expansion of the Employer Job (PRSI) Incentive Scheme to include all new employment created for a period of two years instead of the current twelve months.
“Finally, the Government’s decision to publish the key budget figures in advance of Budget 2012 may help to provide consumers with the confidence and certainty needed in the lead up to Christmas – the busiest period for Irish retailers,” Quirke concluded.