THE BUDGET was given a broad welcome by business groups, who said its general thrust was correct. The changes in corporation tax for small firms was especially welcomed, and most groups praised the PRSI changes.
However, several groups said it did not go far enough. The Government was again criticised for not curbing public spending.
IBEC, the employers' lobby group, said the Government was unable to deliver the radical change necessary to help induce a real improvement in Ireland's competitiveness.
IBEC director-general, Mr John Dunne said that because of the "excessive growth of public spending", the Government had been constrained in what it could do to combat Ireland's economic problems.
Ireland should be preparing for when EU funding dries up, he said. "We are now at the top of the business cycle and we should be gearing Ireland to be more competitive for when the downturn comes. This is a missed opportunity."
Mr Dunne welcomed the changes in corporation tax, measures to help the long-term unemployed, and said the Minister for Finance, Mr Quinn, had kept well within the Maastricht guidelines. "However, IBEC believes that in our current position in the economic cycle a more rigorous target on borrowing than that adopted by the Minister is needed," he added.
The Irish Clothing Manufacturers Federation (ICMF) said the Budget had failed to help companies in the clothing and other sectors of the economy which depend on the UK market. It said the Minister had made no real progress in reducing employment costs for clothing manufacturers.
"The reduction in the lower rate of employers' PRSI from 9 per cent to 8.5 per cent will only yield a net benefit of around £2,500 to a clothing manufacturer employing 50 people and £4,500 per annum to a company with 100 workers," it said.
The ICMF said it was an inadequate response given the strength of the pound against sterling and "given the fact that the British clothing manufacturers only pay 5 per cent national insurance contributions".
It added that the take-home pay for lower paid workers would increase very little. A single worker on £140.00 per week will take home £117.20 compared to £115.50 prior to the Budget.
"Such increases can hardly be considered a significant improvement in take home pay for lower paid workers at whom the Budget was supposedly targeted, " the ICMF said.
The National Youth Council of Ireland (NYCI) welcomed the PRSI and tax increases, but said the extra tax breaks should not be seen as a licence for employers to save on their own wage bills.
The Food Drink and Tobacco Federation (FDT) said the Budget had ignored the issue of competitiveness, particularly in the food industry. "The food industry's request for a targeted reduction in employers' PRSI to compete with the lower PRSI levels in the UK have largely been ignored," said Mr Ciaran Fitgerald, director of the FDT.
He said the only way in which competitiveness could now be addressed was through a fundamental change in exchange rate policy.
The Chambers of Commerce of Ireland (CCI) welcomed the changes in PRSI, which the organisation said should assist job creation. "This is a positive Budget for employment through enterprise," it said.
The Chamber of commerce of Ireland, distinct from the above body, said it was disappointed the overall rate of Corporation tax had not been reduced - even by one or two per cent.
With the end of the special manufacturing and overseas services corporation tax rate of 10 per cent in sight, it is imperative that the overall rate for all companies be brought down steadily and consistently," the Chamber said.
The Institute of Taxation in Ireland said the Budget was a lost opportunity - but for addressing employment and tax reform. Its president, Mr Tadhg Lombard, said the reduction in employers' PRSI rate will have no effect on an employers' decision to recruit staff.
The Institute of Certified Public Accountants in Ireland said the reduction in employers' PRSI rate from 12.2 per cent to 12 per cent will have minimal savings for employers.
It was also disappointed that the Minister had not introduced further incentives in this Budget to assist the self-employed in start-up situations. It said the early years are recognised as a particularly vulnerable time for new business start-ups, because of this further tax relief should have been introduced, the institute said.
Changes in the standard rate of corporation tax from 38 per cent to 30 per cent on the first £50,000 of profits was welcomed by most business groups but dismissed by] the Irish Small and Medium Enterprises Association (ISME), which said its effect on a typical small firm would be insignificant.
The changes in Capital Acquisitions Tax was welcomed by the Irish Tourist Industry Confederation. It said the industry would be pleased because of the large proportion of family-owned businesses in the sector.