Small businesses are calling on the Government to help offset rising labour costs and address the regulation “choking” small businesses.
In its prebudget submission, the Small Firms Association (SFA) has urged the Government to introduce a temporary PRSI rebate to aid with labour costs, which remain the largest challenge of nearly one-third (31 per cent) of small businesses.
The rebate, the SFA suggested, could be based on the number of lower earning workers on a company’s payroll, tied to increases in weekly labour costs expected to occur over the next three years.
David Broderick, the director of the SFA, said the rebate would “give small business owners a chance to remain viable”.
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The association, which represents companies with fewer than 50 employees, is seeking measures to reduce business costs, alleviate the tax and regulatory burden, and to enable the recruitment and retention of skilled employees.
The SFA said it is awaiting the implementation of promises made in the Programme for Government, but “time is short” as the “tax and regulatory constraints that are choking small businesses remain”.
Among the tax cuts the group is seeking are the reduction of the general capital gains tax rate from 33 per cent to 20 per cent, and for stamp duty on the acquisition of commercial property to be cut from 7.5 per cent to 4 per cent.
“Small business owners need the tax system to give some relief without significant cost to the exchequer,” said the SFA director. The association echoed calls for a cut to the VAT rate for hospitality, a long-running campaign of the sector.
He said “punitive taxes and burdensome regulations” are adding strain to small businesses and their entrepreneurs, who he described as the “lifeblood of many communities”.
In further measures to help with costs, it is urging the Government to implement a “significant annual subvention” of €600 million. It is hoped this would “offset system charges and the PSO [public service obligation] levy” while bringing Ireland’s energy costs in line with other European countries.
The SFA is also seeking measures to reduce insurance costs and the introduction of a lending mechanism, similar to Microfinance Ireland, for loan facilities of €50,000-€250,000.
To aid with talent acquisition and retention, the SFA called for the introduction of a share scheme for small businesses, allowing employees to own a portion of the business while avoiding the “prohibitive” upfront payroll and administration costs that deter such compensation now.
They also suggested the introduction of a scaled hybrid working tax credit, of up to €1,000, and a review of the existing employee tax bands.
“High business costs remain a critical issue, so the time for the Government to live up to its commitments in the Programme for Government has arrived,” Mr Broderick said.
