€7,700 more tax on families since last October

Pay packets have shrunk further this week as Brian Lenihan’s latest round of tax cuts hit home, with the average family now paying €7,700 more tax compared to 12 months ago, Fine Gael Enterprise Spokesman Leo Varadkar TD said today (Friday).

“Hard-pressed employees on monthly salaries and their families are seeing further cuts in their pay packets this week as Brian Lenihan’s double income levy, pension levy and health levy hit home.

“The average family is now paying €7,700 more in tax since last October as a result of Fianna Fáil’s two emergency Budgets. A one income family with one child under five and a mortgage is paying €4,600 more as a result of Brian Lenihan’s last emergency Budget, on top of the €3,100 in new taxes and charges imposed last October. This represents a 12% fall in income this year for a middle income family.

“Instead of reforming Government and making long-overdue savings and reforms, Fianna Fáil chose to penalise taxpayers and their families in the last two Budgets. Not only is this unfair, it will also damage the economy by taking money out of circulation.
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Tánaiste Mary Coughlan’s decision today (Thursday) to lecture EU states about the need to reduce red tape is extraordinary, given her own Government’s failure to take any concrete steps to tackle bureaucracy, according to Fine Gael Enterprise Spokesman Leo Varadkar TD.

“It is deeply ironic for the Tánaiste to lecture her European colleagues about the need to cut red tape, given her own Government’s abject failure in this area.

“Fianna Fáil has only ever paid lip service to the need to cut red tape. The Government set a target to reduce red tape costs to business by 25%, without actually having a figure for the total cost.

“The ‘Business Regulation Forum’, set up by the Government, estimated that red tape costs Irish businesses in excess of €500 million a year. Yet to date Mary Coughlan has only paid lip service to this crucial issue for business.

“Instead of lecturing to her EU colleagues, the Tánaiste would do better to take advice from them. Austria, the Netherlands and the UK are all in the process of slashing red tape according to the Standard Cost Model. And unlike the Tánaiste, all these countries have produced a benchmark figure for the red tape burden.

“Fine Gael has called for the Standard Cost Model to be applied to reducing red tape in Ireland.

“A report on red tape commissioned by the Government was produced earlier this year. It has still not been published. I would urge the Tánaiste to perhaps read and publish the contents of her own report before issuing advice on this matter from the European stage.”

18 point rescue plan to support SMEs

Fine Gael Leader Enda Kenny TD has launched a rescue plan for small businesses to help them through the recession and to support jobs. The Party’s Enterprise Spokesman Leo Varadkar TD said the Fine Gael measures could save an average small business around €50,000 a year. (Document can be accessed here)

Speaking at the launch in the Merrion Hotel, Deputy Varadkar published A Fresh Start for Jobs in Small Business, a set of 18 proposals to support small businesses and save jobs. They include measures to support small businesses, tackle business costs such as rent, a freeze on Government charges, and concrete steps the Government can take to protect jobs.

“Small businesses are the backbone of the Irish economy. There has been a silent haemorrhaging of jobs from small & medium enterprises across the country. Yet the Government has failed to produce any concrete measures to support SMEs and stem the tide of rising unemployment.

“That is why Fine Gael is launching its SME rescue package, which includes 18 specific measures to help small firms survive the recession, retain jobs and hopefully create new ones. Our proposals include:

• Offer employers a PRSI exemption for new staff recruited over the next two years, or an alternative of a €6,000 wage subsidy per employee over the same period;
• Reduce local authority rates and freeze Government charges;
• Reduce energy costs;
• End upward only rent reviews to ensure that businesses can benefit from market rates;
• Abolish the €10 travel tax and reverse last year’s VAT hike;
• Ensure prompt payments to businesses from Government and creditors;
• Make it easier for Irish SMEs to win public tenders.

“The SME sector employs more than 800,000 people. This sector contributes billions to the economy in taxes and PRSI, but is being very badly hit in the recession. After years of rising costs mostly imposed on them by the Government, SMEs must now contest with falling demand for their goods and services. In recent months, the Government has made the situation worse. The decision to increase VAT has driven consumers North, which has severely impacted on the retail sector.”

Cowen blind to current economic crisis

Responding to the Taoiseach’s claim that no-one foresaw the impending economic crash, Fine Gael Enterprise Spokesman Leo Varadkar TD said the Taoiseach’s claims are ‘devious, dishonest, and dangerous’.

“Numerous economists and Fine Gael’s own Richard Bruton repeatedly warned the Government that its fiscal strategy was based on an unsustainable property boom. Brian Cowen, who was Finance Minister at the time, claimed the Opposition was ‘talking down the economy’.

“The spectacular crash of the Irish economy and the dramatic rise in unemployment is principally the result of the collapsed property boom. The enormous Budget deficit which has resulted in pay cuts and tax hikes are a direct result of Brian Cowen’s four giveaway Budgets.

“This is accepted as fact. The ESRI constantly refers to the presence of a ’structural deficit’ in the national finances, which is a direct result of past fiscal policy mistakes by the Irish Government. In fact, when the ESRI talks about a structural deficit, it really means a ‘Fianna Fáil’ deficit.

“While the rest of the world suffered a slowdown, Ireland went into a tail spin.
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Fine Gael Enterprise Spokesman Leo Varadkar TD has (today) challenged Brian Cowen to match his Party’s proposals for a five year freeze of local authority rates, rather than the Taoiseach’s limited proposal for a three year freeze.

“Fine Gael wants commercial rates to be frozen for five years in order to help the thousands of businesses who have their backs to the wall. We don’t believe in doing things in half measures, which is why we called for a five year rates freeze in order to make a real difference to businesses.

“I welcome the fact that Taoiseach Brian Cowen has seen the wisdom of freezing local authority rates. However, like so many other Fianna Fáil policies, he stopped short of taking meaningful action and only proposed a provisional three year freeze. Businesses in Fianna Fáil-controlled local authorities could therefore face higher rates after three years, compared to their counterparts in Fine Gael-controlled councils.

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Good business going to wall through lack of credit

With banks starving businesses of vital credit, and an ISME survey revealing that 58% of firms were denied credit by their banks in the last three months, Fine Gael Enterprise Spokesman Leo Varadkar TD has repeated his call for the Government to set up a State-backed loan guarantee scheme for viable small businesses.

“Viable businesses are being starved of credit, putting their future at risk and thousands of jobs on the line. Banks have no excuse for withholding credit from viable companies. But companies, many of them long-standing customers, are still being turned away for loans which would have been granted without a second thought 12 months ago.

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Fine Gael has today (Wednesday) moved a Bill to protect small businesses from creditors who won’t pay their bills on time, by giving them the right to pursue unpaid bills through the Small Claims Court, thus avoiding expensive legal action.

The Party’s Enterprise Spokesman Leo Varadkar TD said small businesses employ 800,000 people, but are being particularly badly hit in the recession.

“In many cases creditors are refusing to pay their bills, which is driving good businesses to the wall and forcing more people on to the dole queues. Among the worst offenders are the Government, its agencies and local authorities.

“The Fine Gael Bill will enable businesses to pursue unpaid bills of up to €2,000 using the Small Claims Court procedure, avoiding considerable legal expense.”

The Fine Gael Small Claims Court (Protection of Small Businesses) Bill 2009 will be introduced on the floor of the Dáil today by Deputy Varadkar.

Note: Bill is available in PDF format here.

Speaking after an Irish Pfizer executive called for job creation and protection measures today (Friday), Fine Gael Enterprise Spokesman Leo Varadkar TD said his Party’s proposals to waive PRSI for new jobs would encourage companies to take on extra staff and counter the unemployment crisis.

“Pfizer’s Vice President of Manufacturing in Ireland and Singapore has called on the Government to implement measures to protect existing jobs and assist companies to create new ones. Dr Duffy compared the situation in Ireland with that of Singapore, where the government’s policy of paying companies to take on extra staff encouraged Pfizer to create 250 new positions this year.

“Fine Gael’s proposal to waive PRSI for new staff positions over the next two years would allow similar job creation initiatives in Ireland. Under the current PRSI system, companies are offered no incentive to expand their workforce. However, Fine Gael’s proposal would encourage companies to recruit new employees and counter rising unemployment, without any real cost to the Exchequer.

“The Fianna Fáil Government has shown a staggering lack of imagination in addressing the recession and the unemployment crisis. It seems to believe Ireland can tax its way back to recovery, while ignoring the enormous economic and social impact of mass unemployment. Any path to recovery must involve incentives to protect jobs and create new ones.

“Fine Gael is also calling on the Government to:

Provide a Government-backed loan guarantee for SMEs, as has been done in the UK;
Reduce both rates of VAT and abolish the Travel Tax (as proposed in the Fine Gael alternative Budget);
Freeze local authority rates and charges to business.

“Unfortunately, after 12 years in power, Fianna Fáil is clearly bereft of ideas. The triumvirate of Brian Cowen, Brian Lenihan and Mary Coughlan is the wrong team in the wrong place. We need new ideas, like those being proposed by Fine Gael, to bring about recovery.”