Association representing small businesses calls for tax changes to support SMEs
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The Small and Medium-sized Enterprise Association (Isme) has called for changes to taxation and the calculation of the minimum wage to support businesses as it sets out its priorities for this year.
This comes as government formation talks are set to resume soon following the Christmas break.
On the taxation front, Isme said while there had been some “modest steps” made in regards to personal income tax for 2025, “a lot more can be done”.
On Vat in particular, Isme said there needed to be the permanent re-establishment of the 9% rate for the food service and grooming sectors.
“The alternative is very significant costs to the taxpayer in social welfare benefit payments,” the association said.
It also called for the 23% standard Vat rate to be lowered to 21%.
It is also seeking revisions to how the minimum wage is calculated. On Wednesday, the minimum wage increased by 80c to €13.50 an hour.
In November 2022, the Government decided to set the minimum wage at 60% of the hourly median wages by 2026, which has meant progressive increases to the minimum wage over the last few years.
Isme said the calculation must reflect that “48% of the workforce is employed by public service or multinationals, and who enjoy far higher wages and greater job security than the vast majority employed in the private sector”.
“At a minimum, public sector pay must be disregarded from calculations. Future increases in the national minimum wage must not exceed the consumer price index,” Isme said.
The association is also seeking a dedicated junior minister position responsible for the SME sector and for the incoming government to engage with the SME sector through the Labour Employer Economic Forum.
On the legal system, the association highlighted a number of issues. It said it was a “roadblock” to infrastructure development, affordable housing, timely commercial dispute resolution, and as well as personal injury awards.
“Under no circumstances should the incoming justice minister accept the Judicial Council's request to increase personal injuries awards,” Isme said.
It is also seeking changes to PRSI.
ISME said a 2% PRSI rate should be applied to all earnings up to the current cut-off of €424 per week, and 6% on the balance.
“This would serve to reduce PRSI payments for all full-time workers earning up to €848 per week,” it said.
Isme chief executive Neill McDonnell said Ireland must not be one of the most expensive States in the eurozone to live and “we should aspire to be the most affordable”.
“This means looking critically at our standard and reduced rates of Vat, energy costs, insurance costs, legal costs and labour costs,” he said.
“Furthermore, Ireland must resource higher levels of infrastructure and housing spend, as well as address risks identified in our National Risk Assessment. This will limit expenditures elsewhere. The private sector can help if it is incentivised to do so,” he added.