The Irish Minister for Finance, Brian Cowen, yesterday revealed his 2008 government budget. In general, it’s nothing surprising – he hasn’t undertaken anything really major.
I’m glad to see the National Development Plan is being prioritised. Irish infrastructure is woefully inadequate for the current population, and its improvement will be paramount to attracting future investment in business here.
Another reform I’m glad to see is that of stamp duty. However, this reform really is a year too late, and should’ve been tackled at the start of the slowdown in the housing market. As it is, it’s a welcome reform, but, combined with uncertainties in the financial markets and the likelihood of further euro zone interest rate hikes to keep inflation under control, it’s not going to vitalise the housing market. It will remain stagnant until sellers and developers realise that they can’t sell their houses at the high prices of recent years, cut those prices to move the stock, and get the market breathing again.
On the income tax side of things nothing great was done. Tax credits have been increased, tax bands have been widened – all the usual stuff really to deal with inflation. Essentially, for most working people, this budget represents a net loss due to the hefty increase in motor tax.
Another essential item has been overlooked again though, and that’s to encourage R&D. Without attracting R&D, Ireland cannot proceed to the knowledge based economy that we have to achieve. The government needs to attract businesses into the country for R&D, which requires an available skilled workforce (ie. investment in education), relatively easy immigration procedures for skilled people wishing to move to Ireland and better tax incentives for both businesses and employees than other countries looking to do the same! I think investment in university research programmes should be increased heavily to attract people into doing research. Also, further investment and tax breaks for companies formed out of university research would help create more highly skilled jobs, and keep our economy going forward. Without this, we’re going to fall behind as an overpriced manufacturing economy, multi-national business will go to cheaper countries and indigenous startups won’t get the support they need to get from an idea to a productive company.
So, overall, the major reform is late and the rest of the changes are nothing spectacular. We’re depending on the National Development Plan and Education investment for our future economic well-being, so let’s hope it’s enough.