How Budget 2019 will impact businesses

What does Budget 2019 mean for employers in Ireland? The overall outlook is that there have been modest improvements which will benefit employees and employers, as well as Ireland’s reputation as a destination for workers, but that not enough has been done to address Ireland’s changing workforce.

Changes to employment tax and personal tax were minimal in the 2019 Budget, the second budget by Minister Donohoe.

For employers however, the increase of 9% VAT to 13.5% is set to have a cost impact for the retail and hospitality industries. Introduced in July 2011 the lower rate of tax was initially introduced as a temporary measure to enable the tourism industry, and other service industries such as hairdressing, to reduce prices.

Speaking about Budget 2019 Peter O’Rourke, Peter Mark CEO, stated… “we’re disappointed this morning…It’s a difficult environment for retail, it’s a difficult environment for the services industry.” With that said the changes to income tax and USC are very welcome by Peter and other employers and will mean consumers have more money to spend.

Women in Business

The threshold for families to access the affordable childcare scheme has been increased, which is a welcome addition, however Ireland still has one of the highest childcare costs across the 36 OECD countries. Speaking on RTE, Cpl CFO Lorna Conn stated… “the budget does not do enough to address the soaring childcare costs which are continuing to push women out of the Irish workforce at a time when their participation is really needed.”

If we’re to address the increasing gender gap and encourage women back into the workforce more needs to be done in this area. For more information on the gender gap and what we as individuals can do to address it, download our latest Future of Work whitepaper.

International Business / attracting FDI

FDI is a hugely profitable area for Ireland, with foreign owned organisations creating almost 20,000 jobs in Ireland last year. To encourage International companies to stay in Ireland, Budget 2019 has confirmed our attractive 12.5% Corporation Tax will remain. A welcome move that gives increased certainty to large internationals.

Another change that will impact International Business in Ireland is the early introduction of the exit charge rules, which are now in place – an earlier implementation date than expected (January 2020.)

Self-employed workers & entrepreneurs

Very little has been done in Budget 2019 to encourage an entrepreneurial mindset or more flexible working opportunities. Modest adjustments have been made. With regard to self-employed workers, income tax credit will be increased by 200, but this still lags behind the PAYE equivalent. If we are to retain and attract workers more needs to be done in this area.

Overall Budget 2019 will bring modest benefits to businesses and workers in Ireland. Looking for the future we must focus on developing talent and future skills, new operating models and investing in people and technology to push business forward.

Listen to Cpl CFO speak about Budget 2019 in full here. If you’re interested in learning more or in working with Cpl to grow your business please get in touch.