TORC

Business stimulus forms part of Minister, Michael Noonan's, Budget 2012

Elements in last week’s budget geared to stimulating business activity are to be welcomed.

Though relatively modest in scope, the extra tax reliefs to revive the property market, as well as, the R&D and business development incentives to assist exports, should prompt some badly needed investment.  

These business-friendly proposals include:

1. Allowing first-time buyers in 2012 to get interest relief of 25%, with other buyers getting 15%.

2. Exemptions from capital gains tax on any commercial property transaction concluded before the end of 2013, if held for at least seven years by the new buyer.

3. Reduction in stamp duty on the transfer of commercial property from the current top rate of 6% to a single flat rate of 2%.

4. Introduction of a foreign earnings deduction for a person who spends at least 60 days a year developing markets in the BRICS nations

5. Inclusion of the first €100,000 worth of R&D expenditure, on a volume basis, for the purposes of the R&D tax credit.

6. Removal of the existing tax exemption for the first 36 days of illness benefit & occupational injury benefit – that was serving as a perverse incentive for absenteeism.

7. Improvements in the tax treatment of foreign expatriates under the Special Assignee Relief Programme (SARP) to attract mobile skills.

However, business will also be asked to shoulder around €400 million in extra charges.

These  relate to changes in the statutory redundancy rebates, in the addition of employer PRSI for employee pension contributions and in the increase in carbon taxes.

A mixed bag, certainly – but, overall, this is the first budget in 4 years that has looked to offering any stimulus for business.

Now, let’s hope the international environment plays its part as well.

PS. For related Torc articles, please click on the following links:
1. Fiscal Emergencies: Ghosts of Christmas Past
2. Bankers: The Human Dimension
3. Innovation & The Smart Economy