Budget 2017 reaction: KPMG Ireland hails 'cautious and prudent' budget

Latest: The tax consultancy firm, KPMG Ireland, have called the Government's Budget "cautious and prudent".

Budget 2017 reaction: KPMG Ireland hails 'cautious and prudent' budget

5.55pm: The tax consultancy firm, KPMG Ireland, have called the Government's Budget "cautious and prudent".

Conor O’Brien, Partner and Head of Tax and Legal Services, KPMG in Ireland said: “This budget is cautious and prudent in its approach – no new personal taxes, some modest USC relief on the first €70,000 of income and efforts to improve access to housing.

"While a halving of the CGT rate applicable to qualifying disposals by entrepreneurs to 10% is to be welcomed, there will be some disappointment that an opportunity has been lost to make Ireland more attractive to entrepreneurs particularly in relation to the relatively low €1m limit that applies to such gains when compared to STG£10m in the UK."

Jim Clery, Head of Real Estate for KPMG Ireland has labelled the help-to-buy scheme as a key measure.

Mr Clery said: “Budget 2017 has introduced a number of measures to help address issues with housing supply. The key measure is the Help to Buy scheme, which we hope will assist first time buyers raise the necessary deposit to acquire their first home.

"It is highly targeted at first time, new build, owner occupiers with 80%+ mortgages. We think it should help supply to increase. Other measures will assist certain landlords as well as householders who rent rooms in their home. No specific tax measures have been announced aimed at releasing land or building new properties, which is a pity, though relaxation of the Living City initiative may have an impact.”

5.45pm: The Union of Students in Ireland has welcomed the €36.5m for the third level sector in the Budget but has emphasised that the funding is insufficient by over €100m.

“Any investment in education is something USI welcomes and the small steps in Budget 17 are in the right direction but are hugely insufficient in the long-term.” Annie Hoey, USI President, said.

“The government failing to prioritise adequate funding for third level education is the government putting barriers to the futures and potential of thousands of students. There are some positives in the Budget but the funding is still inadequate and won’t solve the rotating problems currently in third level education, which are largely funding-based.”

5.25pm: Oxfam Ireland have said the budget was “a significant missed opportunity to address the issues raised by the recent Apple ruling on tax.”

“Oxfam works in some of the poorest countries in the world and sees the impacts of tax dodging every day,” said Jim Clarken, Oxfam Ireland Chief Executive.

“Wealthy corporations and individuals that sidestep their obligation to pay tax have a direct impact on governments’ ability to deliver essential public services. Every school that is not built, every medicine that is not bought for lack of government funds due to tax dodging affects thousands of men, women and children across the world,”

“Most Irish people understand that negotiating special tax deals like the one that allowed Apple to avoid paying €13 billion has greatly damaged Ireland’s international standing and has contributed to Ireland being named as a corporate tax haven,” he said.

“While we welcome the announcement that the Government is planning interventions against individuals engaged in offshore tax evasion, it is hugely disappointing that no new mechanisms were announced to stop tax dodging by multinational corporations that negatively affects poorer countries and to increase tax transparency.

“For example, the budget includes no new rules to tackle aggressive tax planning employed by multinationals as outlined in the recent EU Anti-Tax Avoidance Directive. We are also none the wiser after this budget about whether Apple-type deals are a thing of the past,” Mr Clarken said.

5.15pm: Homelessness and housing charity Simon said the investment of €5.5bn into social housing and housing infrastructure “cannot come soon enough”, writes Joe Leogue of the Irish Examiner.

“The increase of an additional €28 million for emergency housing to €100 million is very welcome given the scale of the homelessness crisis it is critical that people have somewhere safe and secure while waiting for a home,” Niamh Randall, National Spokesperson for the Simon Communities said.

“However we must not be reliant on short term measures and temporary solutions. We know that moving to a secure home with support is the best way to support people to move out of homelessness.”

“We welcome the commitment to ensure that 3,000 people are moved on from emergency accommodation through both rapid builds and HAP in 2017; however this is dependent on Private Rental supply which is at the lowest level ever,” she said.

“In addition, this budget does not address the issue of rent certainty which is urgently needed. There is an urgent need to bring rents into line with real market rates and to be index linked, for example to the Consumer Price Index . The rent stability measures introduced in November 2015 have not had the desired effect of slowing down the market and rising rents,” Ms Randall said.

Ms Randall also warned that there must be built in safeguards to monitor the new incentives for first time buyers “to ensure there is not an inflationary effect in relation to house prices and to pause if necessary.”

Update 4.40pm: The Irish Federation of University Teachers (IFUT) has described the allocation of an additional €36.5m funding to third-level education in today’s budget as ‘like offering a wet sponge to a man dying of thirst.’

Mike Jennings, General Secretary of IFUT, said that instead of responding the dire warnings on fundraising requirements for third-level in the recent Cassells Report, the government and Minister for Education are establishing a further ‘consultative process,’ to kick back decisions to next year’s Budget at least.

“It used to be the case that Ministers were paid to take decisions. Now they expect to be thanked for taking soundings. This is yet another disappointing day for Irish Higher Education and for teachers and students alike at third-level.

“Even within the terms of the limited €458 million overall increase proposed for education spending, third-level has received less than eight percent of this.” Mr Jennings said.

Update 4.30pm: The AA has said that the coalition government’s first budget “has done nothing for motorists and contained no measures to address the crisis in motor insurance prices.”

“Motorists cannot be expected to feel grateful just because things did not get worse.” Says Director of Consumer Affairs Conor Faughnan.

“We are facing a crisis in motor insurance prices at the moment which is badly affecting 2 million Irish people. It would have been very helpful to reduce the 5% levy on all motor insurance which we are paying at the moment but this was not done,” he said.

“Ministers Noonan and Donohoe repeatedly made the point that sacrifices and discipline had allowed Ireland to move away from the financial crisis to a stable and sustainable position. With the emergency over, the time for emergency taxes should also be past. That means an unwinding of the 5 separate tax increases applied to both main fuels since the emergency budget of October 2008 which between them have added over 20 cent per litre to the retail price of both fuels,” Mr Faughnan said.

4.15pm: ALONE has welcomed the increase to the state pension, announced as part of Budget 2017.

However, the charity that supports older people to age at home, also said that the Government needs to do more to support older people in the community.

Sean Moynihan, CEO of ALONE, said: “While we welcome the €5 increase to the pension, we have been campaigning for an indexing of the pension to ensure that its value is safeguarded for older people. This would end the yearly calls for pension increases and give older people fair financial independence.”

ALONE’s pre-budget submission called for an increase in home help hours in line with demand to ensure that older people are supported to age in the community. They said that the number of home help hours has been cut by 1.28 million since 2010. In that time, they claim that the number of older people in the state has increased by 18%.

Mr Moynihan said: “There has been no announcement from the government yet on homecare packages. However, there has been cross party support for ageing in the community. We must plan and make this a reality. With our ageing demographic, supporting older people to age at home must be a priority for every government.”

The Government also increased the Disability and Carer's Allowances by €5, but Down Syndrome Ireland branded it "pitiful".

The CEO of Down Syndrome Ireland, Pat Clarke, said it was “pitiful and wholly lacking in any attempt to redress seven years of austerity measures inflicted on people with disabilities, including those with Down syndrome”.

Mr Clarke said: “We have waited seven years without any increase to these allowances. This €5 is pitiful and does little to reflect the cost of living for those with disabilities. In its budget statement, the Government said it was progressing towards a fairer society - how is this progress?

“This is a time of economic growth and prosperity in Ireland, but yet again it is those who are most vulnerable, those with disabilities, who have been left behind. It seems they may never feel the benefit of the recovery.”

4.05pm: The Sherry FitzGerald Group has welcomed the Budget's ‘help-to-buy’ scheme for first-time buyers of new homes, saying it is a "very important first step to resolving the supply side shortages in the Irish housing market".

Marian Finnegan, Chief Economist, of the estate agents, said: “One of the most significant barriers to increasing supply has been the limited ability of first time buyers to access the new homes market.

"The direct impact of this on the market was an increase in the quantity of larger, more expensive properties under development, for which the pool of purchasers was deeper.

"This is evident by that fact that the average value of new dwellings sold in Ireland increased by 24% during the first six months of 2016, when compared to the same period in 2015. Any measure that halts this trend and increases the supply of much needed affordable starter homes is therefore very welcome."

Update 4pm: The Small Firms Association (SFA) has criticised Budget 2017 “for not recognising the immediate crisis facing small firm exporters in the context of Brexit.”

“Even in a Budget with very limited room for manoeuvre, the Government has missed an opportunity to address the many issues facing entrepreneurs, which would assist them in providing additional employment and driving prosperity in all parts of the country,” said SFA Chairman, AJ Noonan.

“Making our tax system competitive with the UK in areas such as CGT and employee share options must be done today, not in a year’s time. The retention of the 9% VAT rate for the hospitality sector is important in supporting that sector in dealing with Brexit,” he said.

“Whilst we welcome the reduction of the capital gains tax rate for entrepreneurs from 20% to 10%, the retention of the lifetime limit of €1 million will severely limit the impact of the change.

“We must make Ireland a more attractive destination for starting a business or investing in a small firm. The UK, which is one of our biggest competitors for this investment, has a lifetime limit of Stg£10mn. Capital gains tax should have been decreased to 20% across the board, to encourage transactions in the economy, and we strongly argue that this measure would have been self-financing,” Mr Noonan said.

“We welcome the €400 increase of the Earned Income Tax Credit for the self-employed but will continue our campaign for full equalisation with the PAYE tax credit, as well as pushing for the Government to abolish the additional 3% USC that applies only to the self-employed," he said.

3.30pm: A mixed reaction to the Help to Buy Scheme.

The Peter McVerry Trust said it will need to to see the full details of the scheme. The charity said it is worried” that the thresholds set out in the Minister’s speech mean that previous target of building affordable homes for first time buyers has been abandoned.”

“In the summer of 2016 Minister Simon Coveney stated that the construction industry would be challenged to produce affordable homes for first time buyers, with a figure of €300,000 benchmarked for Dublin,” Pat Doyle CEO of Peter McVerry Trust said.

“However, the details of the Help to Buy Scheme announced today which will allow qualifying purchases of up to €600,000 will undermine that commitment. Peter McVerry Trust is concerned that today’s announcement will interpreted by the construction industry as an abandonment of efforts to bring the cost of new homes into line with what first time buyers can realistically afford. Ultimately this scheme could very well drive up the cost of housing and renting for everyone in the housing system,“ Mr Doyle said.

The Construction Industry Federation welcomed the measure, however.

“The measures introduced today are a significant step towards solving the housing crisis by addressing the chronic lack of supply in new builds,” CIF Director General, Tom Parlon said.

“In terms of resolving the housing crisis, the CIF’s Irish Home Builders Association welcomes the introduction of this tax rebate scheme aimed at helping first-time buyers to save deposits for starter homes. There is an acute shortage of activity in this sector because first-time buyers cannot secure mortgages. As a result, banks won’t provide finance to home-builders making the building of new starter homes unviable.”

3.20pm: The ISPCC has said that the subsidy of up to €8,000 for families on low to middle income for childcare arrangements is particularly welcome.

ISPCC Chief Executive, Grainia Long, said: “The ISPCC welcomes the fact that no matter what the income of a family, they will receive a subsidy of some sort.

"In addition, targeted supports for parents of children up to the age of 15 is welcome."

3pm: Disability groups have said the Budget will do little to help the people they represent.

"Disabled people and their families don't just need measures to relieve pressure from them. They need measures to ensure they get out of the spiral of poverty and exclusion,” Senator John Dolan, CEO Disability Federation of Ireland said.

“This budget could have achieved that fairness and kick started their recovery but it does not do so by any measure."

"The effective way to support people in most need has been deliberately bypassed in this Budget. Children, adults, families and older people in most need are those coping with disability and mental health. That has not been done in this Budget."

"When resources are modest they should be focused for most impact. Populism rather than public benefit has been the winner in this Budget Statement."

Disability charity Rehab were also critical.

“While a €5 increase in social welfare payments is welcome, it will do little to close the gap in income that people with disabilities have experienced over the last 8 years,” it said.

“Of particular concern is the decision to limit reductions in prescription charges to people aged over 70. This reduction should also have been extended to people with disabilities aged under 70. A disability knows no age and does not distinguish between somebody who is 20-years-old or 75-years-old.

In taking this decision, the Government has missed an opportunity to recognise the major monthly cost that prescription charges represent for people with disabilities,” Rehab said.

2.52pm: Chambers Ireland said it wanted to see more in the Budget to help businesses post-Brexit.

“There is something for everyone in this Budget but the business community would have liked to see more measures to assist them as we enter an era of post-Brexit uncertainty,” Ian Talbot, Chief Executive of Chambers Ireland said.

“The reduction in the rate of Capital Gains Tax applied to Entrepreneur Relief from 20% to 10% will be welcome and of particular relevance to high potential SMEs.

“Investment in childcare through direct subsidies to providers will have a positive impact on female labour market participation and job activation and is a welcome support for working parents,” he said.

“Some of the measures announced today such as the €400 increase to the Earned Income Tax Credit for the self-employed will help Irish businesses as they enter a potentially challenging trading environment.

“However, the reality is that the major concerns for the business community go beyond Budget 2017. The big threats to Ireland’s economic development will need strategic level interventions on issues such as maintaining our relative competitiveness with the UK, rapidly expanding our investment in infrastructure and ensuring our export driven economy and exchequer receipts can be sustained in the face of diminishing international demand.”

“We must adopt a sense of realism. It is not possible to “Brexit-proof” the economy and as a nation we must stand ready to be as adaptable and flexible as we have been in the past to devise strategies to address forthcoming challenges as they become clearer.”

2.50pm: The Irish Cancer Society has been very critical of the Budget announced this afternoon.

“While we welcome the small decrease in the prescription charge for over-70s, this piecemeal change ignores the crippling financial impact of huge increases to statutory charges on all cancer patients since 2008,” Donal Buggy, Head of Services and Advocacy, said.

“Over €600m in annual costs have been transferred from the State to the patient since 2008. These costs are levied on us when we’re sick, when we may be working reduced hours because of our illness and when we’re experiencing increased out-of-pocket payments for things like hospital car-parking, non-prescription medication and increased childcare costs,” he said.

“Increased statutory charges have been an albatross around the neck of cancer patients and we are calling on the Ministers for Health and Public Expenditure to move swiftly to put plans in place to reduce the financial burden of the disease.”

Mr. Buggy has asked that proposals set out in the Society’s Pre-Budget Submission to abolish the prescription charge, reduce the amount patients pay under the Drugs Payment Scheme to €85 a month, and to abolish inpatient charges are adopted “to help alleviate the cost of a cancer diagnosis.”

“Our fully-costed proposals, if implemented, would save cancer patients and survivors with medical cards up to €300 a year, and those without medical cards up to €1450 a year,” he said.

“Government charges are the final straw for patients, many of whom are already crippled by the impact of a reduced income and increased costs. While the piecemeal progress in this year’s Budget is a real let-down for many, the Irish Cancer Society will continue to push for reduced out of pocket payments, so those facing huge additional bills can get help from the state when they need it most,” he said.

Update 2.50pm: Unsurprisingly, smokers are not happy with the extra 50c excise on a pack of cigarettes.

“The Minister tells us that the justification for today’s increase is to reduce tobacco consumption. If that was truly the aim, the budget would have included subsidies for e-cigarettes,” John Mallon, spokesman for smokers’ advocacy group Forest Ireland said.

"Yet again smokers are being forced to subsidise tax breaks for wealthier members of society. It's unfair and it discriminates against those on lower incomes."

Update 2.48pm: On the other hand, the Irish Beverage Council are annoyed that there’s going to be a sugar tax at all.

"We are extremely disappointed that the Minister for Finance continues to labour under the delusion that additional taxes on soft drinks will have any positive impact on obesity,” Kevin McPartlan, Director of Irish Beverage Council said.

“Internationally, this thesis has been tested and has a 100% failure rate. A sugar tax will hit consumers, industry and the economy for no public health benefit,” he claimed.

"It is some comfort that the Minister has announced that the levy will not be introduced ahead of that planned in the UK. We can only hope Government will engage in meaningful dialogue to minimise the economic loss to industry and threat to Irish jobs.

"Tackling obesity requires a whole of society approach. We remain committed to playing our part in tackling obesity and will continue with initiatives like reformulation, which took 2500 tonnes of sugar and 10 billion calories from the Irish diet in a seven year period,” he said.

Update 2.45pm: The Irish Heart Foundation are not happy that the government has kicked the soft drink can of sugar levies down the road until 2018.

“The decision to postpone the introduction of a sugar-sweetened drinks levy to 2018, despite it being a cornerstone measure of the new national obesity strategy, suggests there is still no genuine cross-Government commitment to tackling obesity,” Irish Heart Foundation head of advocacy, Chris Macey said.

“Today is World Obesity Day and new figures released by the World Obesity Federation show there are now 54,280 obese, school-aged children in Ireland. They, and every other child in this country, have been badly let down in this Budget,” Mr Macey.

However, the group welcomed the 50 cent increase in tax on cigarettes, saying the measure will continue to drive down smoking rates, particularly among teenagers, and thereby “act as another nail in the coffin of the tobacco industry in Ireland.”

Update 2.15pm Active Retirement Ireland (ARI), have said the decision to add €5 to the State Pension is “a step in the right direction”

“We welcome these moves to alleviate the pressure many older people are under to make ends meet,” Peter Kavanagh, Head of Communications and Public Affairs with Active Retirement Ireland, said.

“It’s a step in the right direction. Income inequality still disproportionately affects older people who don’t have any future earning capacity, so we need to ensure that their income and benefits are secure in the long term.”

However the group was disappointed at the lack of response to its call for a full restoration of cuts to the Household Benefits Package and more investment in Home Care Packages for older people in need of care.

“Obviously, it’s disappointing that older people have to go at least another year without these vital supports that were withdrawn during successive austerity budgets,” said Kavanagh.

“Considering the fact that TDs and Ministers are restoring their own pay, surely it’s time for the most vulnerable to truly feel the recovery,” he said.

Update 2.10pm: Macra na Feirme are another group happy with Budget 2017, and have welcomed the measures on credit, cash flow and land mobility/inheritance.

''Affordable credit is the lifeblood of a young farmers business when starting out and establishing themselves in the industry, we look forward to hearing the full details of the scheme from Agriculture Minister Michael Creed,” Macra President Sean Finan said.

“Macra also welcomes the extension of the farm restructuring relief scheme until 2019, which will aid land mobility. This move further extends the existing measure and will aid the mobility of land allowing farmers to consolidate their holdings in a tax efficient way,” he said.

“Getting the correct structural environment regarding land mobility for Irish farming is essential for future growth and competitiveness of the industry,” Mr Finan said.

Macra also welcomed the increase in the Capital Acquisitions tax threshold in Category A from €280,000 to €310,000.

While the group had called for an increase to €350,000, Mr Finan said the group feels it is “a step in the right direction, but Minister Noonan could have gone further.”

Update 2.05pm: The National Women’s Council of Ireland are very happy with the childcare package announced as part of Budget 2017, hailing it as “a significant change of direction that has the potential to have a huge positive impact on women’s equality if further funding will be provided.”

“The childcare package is the first step to developing a publicly subsidised universal childcare model, similar to the models available in many other European countries,” Orla O’Connor, Director of NWCI said.

“The provision of childcare is the most important public service in order to increase women’s participation in employment and civic life. This applies to women across all income groups as they are the most likely to drop out of employment when they have children.

“We therefore particularly welcome the start of a universal payment that will be available to parents in all income groups. While funding is still very limited at this point, the scheme has the potential to have an enormous positive impact on women’s equality if further funding is provided,” she said.

“We also welcome that payments will be made directly to the service providers as a measure to increase quality and avoid that providers will simply increase costs.”

In relation to the second part of the scheme that will be more targeted towards lower income families, Orla O’Connor said.

Update 1.50pm: Anti-smoking group ASH Ireland has welcomed the announcement that the price of cigarettes is to go up by 50c.

“If the Government is to achieve its objective of establishing a smokefree Ireland by 2025 then it must consistently increase the price of tobacco,” Dr Patrick Doorley, Chairman of ASH Ireland said.

“Significant inroads have been made in regard to smoking prevalence over the past 13 years with current levels at approximately 19.5%, down from 29% in 2003. It would be possible to reduce smoking levels by a further 10% at least in the next 10 years; if there are consistent and significant increases in tobacco price; combined with other measures such as the introduction of standardised packaging,” he said.

However the group said it is disappointed that VAT has not been reduced on Nicotine Replacement Patches and that a 50c environmental levy was not introduced on the tobacco industry for each pack of cigarettes sold in Ireland.

“I ask the Government to continue the fight against smoking, and push ahead with the implementation of plain packaging legislation. Close to 6000 of our citizens die each from smoking, and we must reduce this dreadful statistic by de-normalising smoking, educating young people and adults on the risks and above all introducing pro-health legislation”, Dr Doorley said

Update 1.40pm: Real Estate Company Savills Ireland aren’t happy with Budget17, and say the Help-To-Buy scheme will make housing less affordable.

“The centrepiece of this year’s Budget is a Help-to-Buy(HTB) scheme which will give first time buyers an upfront tax rebate equal to 5% of the value of the property when they purchase a new home,” Dr John McCartney, Director of Research, Savills Ireland said.

“By restricting the scheme to new builds the Government says it will stimulate supply. True – giving people more money to compete for limited new builds will drive up prices and help restore developer profits.”

“Unfortunately this also makes housing less affordable. Alternative approaches, such as cutting VAT on new homes, would equally have encouraged development - but at a lower price point. However the Government bottled out of that option because of optics – it would simply have looked too much like a handout for developers,” he said.

“Let’s be absolutely clear, HTB is just as much of a handout to developers as a VAT cut. The only difference is that the money briefly passes through the hands of First Time Buyers,” he said.

“The new Government deserves kudos for the constructive approach it has taken to resolving the housing crisis through Rebuilding Ireland. However, rather than building on that progress, Budget 2017 represents a wasted opportunity. House buyers will be no better off because of this scheme –prices will just increase to offset the tax rebate. Some developers may be able to get building, which is a positive. But a more courageous approach focused on cost reduction would have achieved the same thing, along with more affordable housing,” he said.

Update 1.30pm: The Irish Tourist Industry Confederation (ITIC) has already welcomed Budget 2017, in particular, the retention of the Vat rate for tourism services at 9% which, it says "allows Ireland to remain competitive in this key period of post-Brexit uncertainty."

“17 of the 19 euro-zone countries have tourism Vat rates of 10% or less so the tourism Vat rate in Ireland is right-sized and competitive at the moment," Chairman of ITIC Paul Gallagher said.

"Tourism employs 230,000 people throughout the country and its future growth is predicated on a competitive industry and appropriate government policies”.

However Eoghan O’Mara Walsh, ITIC Chief Executive expressed disappointment that investment in tourism was not greater in Budget 2017.

“Tourism capital investment by the State is very low and not appropriate for a sector that is so important to the economy. Equally marketing budgets by the State for tourism need to be increased significantly or otherwise visitor numbers will suffer in the near future. The tourism industry in Ireland has provided an economic boost to all parts of the country – only last month Center Parcs got the go-ahead for a €232 million holiday park in Longford which will lead to 1,000 permanent jobs for the area. This is the largest single investment in tourism infrastructure by a private company and the State needs to ensure that awareness of Ireland as a holiday destination is at appropriate levels in our key source markets,” he said.

Earlier: Renua are quick off the block with their #Budget17 reaction writes Joe Leogue.

They say the Government should have a tax strategy that would “have as many people as possible in the tax net, but paying low marginal rates.”

They also claim that “domestic wealth creators” - such as small and medium businesses - are not valued by Government, and also call for an interim 9% VAT rate on construction “which will lower costs of building plus a workable fast track planning process for larger developments that will ensure quicker decisions while guaranteeing that the voice of local representation is also heard.”

They also call for a Commission on the Cost of Disability that would target funding to “those that need it most”.

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