Ireland has become an expensive place to do business and unless the Government takes corrective measures our ability to compete internationally will be undermined, business and employers group IBEC claimed today.
In its pre-budget submission to the Minister for Finance, the group said that costs must be curtailed and productivity increased in both the private and public sectors to reverse this trend.
Director General of IBEC Turlough O'Sullivan said that business costs, including wages, have risen at higher rates than our main trading partners and claimed that this has caused poor export performances in recent years and the acceleration of job losses to lower cost economies.
"Budget 2006 must not reduce the real value of net take-home pay by raising PRSI or indirect taxes or by failing to increase tax bands and tax credits in line with wage increases," he said.
Mr O'Sullivan warned that the Budget must not deliver any further stimulus to inflation and must not fuel the costs of services to business provided by the public sector.
The group also called for reforms in the pensions sector and said that all workers, irrespective of earnings, should have the same incentive to contribute to pensions and that this should be set at 42 per cent tax credit for those not on top rates of tax.
"For someone on the standard rate of tax, this would equate to a Government contribution of about €1 for every €5 in a private pension plan or PRSA. For someone exempt from tax, it equates to a Government contribution of about €2 for every €5 or so invested," said Mr O'Sullivan.
He added that the Government should remove the cap on pension contributions for one year to allow those on lower incomes to invest SSIA proceeds in a pension fund