Hays surveyed 218 financial directors, financial controllers and other senior finance executives on Budget 2011 in October, asking which measures the Government should adopt to reduce the deficit. The subsequent publication of The National Recovery Plan has revealed both similarities and differences in the proposals suggested by the finance leaders of Ireland and the Government’s plans.
Alternative measures supported the introduction of a third, higher-rate income-tax band, which was suggested by three in five (60 per cent) senior finance professionals. The introduction of a ‘Universal Social Contribution’ would also be welcomed by 72 per cent of these key influencers.
"It’s fascinating to compare and contrast what finance leaders across Ireland would implement in Budget 2011 with the Government’s National Recovery Plan," commented Richard Eardley, Managing Director of Hays in Ireland.
"The decision not to touch the semi-states through a privatisation program is seen as something of a missed opportunity by our financial experts. It will be interesting to see if this does appear on the agenda in future. The other notable absence from the Recovery Plan was any signal regarding a third, higher-rate income-tax band. With the majority of our survey respondents supporting such a measure and popular opinion seeming to back tax increases for the wealthy, perhaps this is one that the Government could well have implemented."
The survey responses match some of the Government’s proposals in The National Recovery Plan. Some 86 per cent support a reduction in social-welfare payments while 73 per cent of respondents believe this would impact positively on employment. Three quarters (77 per cent) of the respondents also agree with the Government that the minimum wage should be reduced and the same number believe this would impact positively on employment.
We also asked the senior finance respondents to proportion the savings required in Budget 2011 across capital and current spending and tax increases. They agree savings should be biased towards spending cuts and four in five stated that tax increases should not account for more than 25 per cent of the adjustment target in comparison to the Government’s plans for 33 per cent.
When specifically asked how tax increases should be proportioned amongst income tax (PAYE), Corporation Tax, VAT and Employers’ PRSI, 62 per cent of senior finance professionals feel increases should be biased towards income tax. Some 49 per cent believe Corporation Tax should not be increased for 2011 and 51 per cent wouldn’t increase Employers’ PRSI.
"We were surprised that half of the finance leaders who responded to our survey would accept an increase in corporation tax. Considering how matters have developed in the past month, I wonder if we asked that question today would we get the same answer?" added Eardley.
When it came to cuts in capital spending, 32 per cent would not make any cuts to spend in education and 27 per cent wouldn’t cut the healthcare budget.
Half of the respondents expect that this month’s Budget will make it difficult for them to employ people in 2011 while only eight per cent feel the Budget will make it easier.
Other suggestions made by the finance executives included engagement in Public Private Partnerships, a one-year PRSI holiday for new employees recruited in 2011 and improved access to finance for Small and Medium-Sized Enterprises.
Editors notes: Hays surveyed 218 senior finance professionals from an equal number of large and small companies across Ireland.
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