DRINKERS, DRIVERS and smokers in the North are coming to terms with being a lot worse off today following big rises in taxes unveiled by UK chancellor Alistair Darling in his first budget.
However, PricewaterhouseCoopers (PwC) said Mr Darling's budget would leave Northern Ireland better off by £21 million (€27.38 million) thanks to increases in child benefits and fuel allowances for pensioners.
Among the other headline measures announced yesterday were proposals to make long-term mortgages more accessible and to introduce a possible plastic-bag tax. Mr Darling also unveiled a new airline flight tax and a 20p cut in the main rate of income tax.
The budget received a lukewarm reception among businesses in the North, with most agreeing that it was business neutral.
Mr Darling said the budget was designed to promote sustainable growth and prosperity and would support businesses through a series of new measures. These included initiatives to help small businesses, such as an additional £60 million for the small firms' loan guarantee scheme. Capital gains tax will remain unchanged at 10 per cent for small businesses.
As part of the budget, the chancellor has set a goal for small to medium-sized enterprises to win 30 per cent of all public-sector business in the next five years.
The Federation of Small Businesses in the North said the budget was unlikely to improve the business environment, but firms would be relieved that it would not make it any worse.
Wilfred Mitchell, FSB Northern Ireland policy chairman, said some of the budget's business measures could prove positive.
"Plans to reform regulation, improve access to finance by expanding the small firms' loan guarantee scheme, help female entrepreneurs and a goal to give at least 30 per cent of public-sector procurement to small and medium-sized businesses all have our support," he said. "Public-sector procurement is, however, a devolved issue to the Assembly, and our locally elected Ministers need to take a lead from the chancellor."
Under plans announced last year, corporation tax will fall from 30 per cent to 28 per cent next month but the tax burden for small firms will increase from 19 per cent to 20 per cent.
Mr Darling has promised to introduce further significant reforms to the UK's business tax system. But Institute of Directors chairman Frank Bryan said the majority of businesses in the North - most of which employ less than 10 staff - had little reason to applaud Mr Darling's first budget.
According to PwC chief economist Philip McDonagh, the £21 million Northern Ireland will receive from the budget is well below the £607 million delivered last year, but it is still welcome.
"Northern Ireland will be relatively sheltered from any [ economic] downturn, due to our current high level of public expenditure. Whilst this will fall sharply from 2009, the investment already in the economy will mean Northern Ireland should grow at a faster rate than the UK average."
