Business groups have called on the Government to reduce taxes on labour and investment in October’s budget.
In their pre-budget submission documents, Chambers Ireland and the Small Firms Association seek a reduction in the marginal (highest) rate of income tax and ask the coalition not to introduce new taxes. "It is vital that no new taxes are introduced in Budget 2015," said Chambers Ireland chief executive Ian Talbot.
While some sectors of the economy have seen a nascent recovery, many are facing tough economic conditions, he said. Because of this, marginal tax rates should fall below 50 per cent “to reward employment, support enterprise and attract high-value foreign direct investment jobs”, according to the business network.
The mooted reduction in the universal social charge (USC) “would be a welcome means of putting more income in consumers’ pockets”, Chambers Ireland notes in its submission.
It is also seeking a number of changes to the capital gains tax system, including a reduction in the rate to 20 per cent for active investments.
The 9 per cent VAT rate in the hospitality sector should be maintained, with more clarity given to hospitality and tourism industries about the future of this rate, Chambers Ireland adds.
SFA chairman AJ Noonan said it was essential that the budget supported investment in business and rewarded work.
Both the SFA and Chambers Ireland call for the lower rate of employer’s PRSI to be halved to 4.25 per cent.
That rate was in use between July 2011 and December 2013, but it reverted to 8.5 per cent this year. "This is hitting payroll costs now and is impeding job creation," Mr Noonan said. Company directors should receive the PAYE tax credit, where they pay tax on a PAYE basis, the association says.
Self-employed
It also wants a voluntary PRSI contribution for the self-employed that would enable them to qualify for the social welfare benefits available to PAYE employees.
Mr Noonan said the Government should reduce the marginal rate of tax and extend the entry point at which people are taxed at the marginal rate.
The Employment and Investment Incentive Scheme should be enhanced too, according to the SFA.
