Budget 2024 could drive inflation and hit small businesses – Chamber reaction
October 11 – Sligo Chamber of Commerce today warned that changes to personal tax announced in Budget 2024 could further drive inflation and negate the benefits of a €250m fund to help small businesses deal with rising costs.
The business group believes the measures will affect lower-income households and small businesses hardest at a time when many are continuing to deal with the fallout of the Covid-19 pandemic, increases in VAT rates, energy costs, the minimum wage, and leave entitlements, as well as the introduction of auto-enrollment for pensions in 2024.
The Chamber welcomed Minister Michael McGrath’s announcement of an increase in funding for transport infrastructure and housing, and strongly supports the move to allow Local Authorities contract for the building of social housing.
However, Sligo Chamber questions Budget 2024 plans for a €14bn Infrastructure, Climate and Nature Fund to support climate and nature-related projects, saying that the level of funding is insufficient to realise the ambitions of the 2021 National Development Plan and to meet the challenge of Ireland’s growing population.
It also warned that the €100bn Future of Ireland Fund, set up to tackle the challenges of digitisation, climate change and ageing population, is at risk of becoming something of rainy-day fund for a future Government and, like the National Pension Reserve Fund, could be drawn on to alleviate the effects of another financial crisis.
The Chamber is enthusiastic about changes to simplify the tax exemptions system, which it says will now help to disabuse the belief within the business community that the complexity of the system was intended to control demand.
Aidan Doyle, Sligo Chamber CEO, said: “Budget 2024 was as unsurprising as it was, in many ways, did not demonstrate enough ambition. We welcome the announcement of the €250m fund to support small businesses struggling to cope with rising costs but we expect that, overall, Budget 2024 could drive inflation rather than alleviate it. In particular, the reduction in personal tax will have a negative impact on the real incomes of lower-income households, which could lead to higher costs for businesses and a reduction in the government’s overall receipts from taxation.
“We welcome the introduction of new savings funds but question whether the €14bn provision for the Infrastructure, Climate and Nature Fund is enough to meet the scale of the infrastructure and climate adaptation challenge we face.
“Many of the measures outlined in Budget 2024 represent an improvement on existing policies but fall short of what’s required to drive growth nationally and in the Sligo region. Indeed, the continued failure to invest in housing and infrastructure in the North West is stifling growth. Last month, Sligo Chamber called for the redevelopment of the N17 road from Sligo to Galway, highlighting the safety concerns of motorists and active travellers, and the health risks of residents along the route. Budget 2024 fails to provide the kind of support necessary to fuel development and fulfil the promise of the 2021 National Development Plan.”