CARBON TAX should be postponed, excise duties on alcohol cut and an “ambitious” jobs stimulus package introduced, employers’ group Ibec has argued in its pre-budget submission published this morning.
The group says there should be no further increases in income taxes and believes the ceiling on employee social insurance payments should not be removed.
It says it would be inappropriate to introduce a carbon tax at present “due to the unprecedented economic difficulties and competitiveness challenges facing Irish business”.
A carbon tax on fuel products was one of the central recommendations of the Commission on Taxation report. It is estimated that the tax will raise €500-€600 million a year as well as encourage a change in consumer behaviour on energy usage. However, Ibec contends that the recession means there is no urgent environmental need for its introduction.
“The fact that emissions have fallen substantially as a result of the economic crisis also undermines the case for immediate introduction of a carbon tax,” its submission states.
Businesses and the energy sector require at least a six-month notice period before any new carbon tax could be implemented, Ibec adds.
The introduction of a carbon tax and the removal of the earnings ceiling above which PRSI contributions are not paid by employees are understood to form two of the main taxation and welfare measures in the December budget. Both measures were included in the renewed programme for government agreed by Fianna Fáil and the Green Party earlier this month.
Ibec also wants tax relief on personal pension contributions to remain as it is, rather than the proposed single 30 per cent rate of tax relief agreed under the programme for government.
It says excise duties on alcohol should be reduced in order to stem the losses to the exchequer from cross-Border shopping, which Ibec said would cost the exchequer almost €430 million this year.
Ibec also wants the Government to allow businesses to offset tax credits for research and development (RD) activities against either their employer’s PRSI or corporation tax bill. It is calling for the introduction of a State-backed trade credit insurance scheme to help exporters and an expansion of the employment subsidy scheme.
Overall, it backs the Government’s plan for a tough budget, on the basis that the sooner the Government tries to correct imbalances in the public finances, the easier it will be to do so.
“The Government should front-load adjustments in the public finances in this budget; that way businesses and consumers will become more confident about future economic prospects,” said Ibec director general Danny McCoy.
