Reactions to Budget 2014

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Business groups and organisations react to the positive and negative sides of Budget 2014

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16 October 2013

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Budget 2014 has received mixed reactions across the board since its release yesterday (15 October). Here is a breakdown of some of the reactions released so far:

 

CBRE – Commercial property consultants

Commercial property consultants, CBRE, yesterday reacted favourably to Budget 2014 welcoming a Budget which it describes as pro-business and pro-jobs.

According to Marie Hunt, head of research at CBRE yesterday, "There were several measures introduced in today’s Budget which will help stimulate job creation in the Irish economy that will in turn benefit the construction and property sectors."

CBRE welcomed the retention of the 9% rate of VAT for the hotel and tourism sector and the removal of air travel tax, which it says is critical to sustaining the momentum witnessed in this sector of the economy over the last 12 months. The property consultants also welcomed the Government’s commitment to retain Ireland’s 12.5% corporate tax rate, which they say is critical to inward investment and job creation.

The extension for a further 12 months of the capital gains tax (CGT) waiver was also welcomed by the group who believe it will alleviate pressure that had been building over recent months to have transactions completed by the deadline of 31 December 2013. In turn this will ensure a steady flow of transactional activity into 2014. 

The property consultants welcomed the decision to extend the Living City Initiative to the cities of Cork, Galway, Kilkenny and Dublin. However, CBRE says that the Government missed an opportunity today to introduce an incentive package such as the Business Premises Renovation Allowance (BPRA) which operates successfully in the UK to encourage the redevelopment and refurbishment of secondary office accommodation.

 

The Restaurants Association of Ireland (RAI)

The RAI yesterday welcomed a Pro-Jobs and Pro-Tourism Budget 2014. The RAI praised Minister Noonan’s decision to retain the 9% VAT rate on tourism services in the Budget.

Adrian Cummins, chief executive of RAI, said that "Retention of VAT at 9% into 2014 is something crucial to the sustainability of restaurants and indeed businesses in the tourism sector throughout the country."

"We stressed that Budget 2014 needed to be a Pro-Jobs Budget. The Government got it right by retaining the reduced VAT rate. The retention of VAT at 9% for 2013 is a huge coup for the tourism sector. Given that the sector created 15,000 jobs since its introduction in July 2011, and a further 5,000 jobs are expected to be created as a result of its retention over the next 12 months – this is the correct decision by Government."

RAI also welcomed the elimination of the Airport Departure Tax, which will give a further boost to tourism growth and development.

The increase in Excise Duty however, will hit restaurants at a time where consumer spending is on the floor. Excise duty already increased by 41% in Budget 2013, so a further increase of 50 cent on a 75cl bottle of wine, is said will make it for restaurants in wine-trading.

The group believes that this move doesn’t tackle the below-cost selling of alcohol in supermarkets and off-licenses as the association had put this forward in its Pre-Budget 2014 submission.

 

The Irish Brewers Association (IBA)

The IBA has said it was severely disappointed at the Government’s decision to increase excise duty on a pint of beer and cider by 10 cent. This 18% increase will not only leave people paying more in Irish pubs than in almost every other European country, but it will also cost jobs in the wider agriculture sector.

The group explained that excise on beer and cider has now increased by 43% in the last two years. Irish beer drinkers now pay the third highest and cider drinkers pay the second highest rate of taxes on their pint in the EU. Recent EU studies showed Irish alcohol prices as being the second highest in Europe.

When compared with December of 2011, the IBA says the excise increase means that consumers are now paying an additional 25 cent in tax on each pint sold in an Irish pub. This is made up of an additional 5 cent in VAT on top of the two increases of 10 cent in excise announced by the Government in the last two Budgets. 

The Chairman of the IBA, David Smith, commented: "The decision to increase excise on beer and cider by 43% over the last two years is extremely disappointing. The Irish brewing industry currently purchases over 170,000 tonnes of malted barley and 46,000 tonnes of apples from Irish farmers each year for use in the brewing of beer and cider. This in turn supports over 2,500 farming families all over Ireland making it one of the most important sectors within the drinks industry in terms of indigenous manufacturing."

He continued: "At a time when domestic beer and cider consumption is falling (14% in last 5 years), we estimate that this draconian increase in excise will put serious pressure on the Irish beer and cider industries and their suppliers. In short it will kill jobs. While Irish beer and cider products continue to perform strongly internationally, high domestic excise rates send the wrong message to important export markets."

 

Irish Farmers Association  (IFA)

IFA president John Bryan reacted to Budget 2014 saying the Minister for Agriculture Simon Coveney must ensure that all eligible animals secure the estimated €60 per cow in 2014, and that there is a significant increase in the Suckler Payment in the new CAP Programme from 2015.  

The IFA president said the absence of a new agri-environment scheme for the 13,000 farmers leaving REPS4 is a serious blow. "The Minister must move to ensure that farmers with restrictions on their farming activity are provided with an interim scheme in 2014 until the new Rural Development Programme is introduced in 2015."

Bryan believes the retention of funding for key schemes, including disadvantaged areas, AEOS, TAMS and forestry for 2014 is vitally important. "However, the Minister now needs to deliver 50:50 co-financing for the Rural Development Programme for 2015-2020, including a strong agri-environment programme for 50,000 farmers." He also believes that the increase in the VAT rebate from 4.8% to 5.0% is justified. 

 

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