Galway Independent Column - 13th October 2010

There’s only two months to go to Budget 2011 and rarely has an upcoming budget engendered so much talk and frankly, dread. Government and Opposition are batting it across the house and in the media…utterances are getting daily more alarming culminating this week in Deputy Varadkar’s belief that our Budget deficit might be reduced by €8 billion, a whopping €4 billion more than the Government’s ‘worst’ case scenario. Minister Lenihan has warned that the budget target would be ‘well above’ the existing figure of €3 billion.

Not since the days of ‘Mac the Knife’ has the prospect been so grim. Minister Lenihan has the toughest of tough jobs to do but are we, as a nation, ready or indeed able to take this ‘medicine’?
In this column Galway Chamber has written about our Pre-Budget to Government document where each year we alert Government to the issues, the generalities and particulars that are important to our members and some suggestions as to how these matters should be dealt with. We have always been conscious that this document would include possible solutions because, as we know, it’s very easy to demand change but it’s a different matter to come up with viable, acceptable ways to implement change.

Taxation and Enterprise are high on our agenda in our Pre Budget deliberations. By Enterprise we mean everything that affects enterprise here. By taxation we mean all taxes included extra taxes that only business pays ie Commercial Rates, a crippling extra tax on business that many businesses perceive are not entitling them to anything ‘extra’ event though it is hugely affecting their bottom line and in some cases is their death knell. It was recently reported in a list of items effectively ‘mothballed’ for the foreseeable that one of these longfingered reforms is ‘A System for Financing Local Government’. We are aware that Local Authorities have to balance their books, we are aware that services must be provided but it is no longer possible for business to balance the books for Local Authorities.

There has to be another way. We have long advocated that Government its system of funding for Local Government to help compensate for the decline in construction activity and its effect on revenues derived by local authorities from development contributions. Specific measures to redress this inequity should include: a phasing out of Commercial Rates by introducing a more broadly based sectorally inclusive system of funding for Local Government. During the phasing out period the level of Rates must be reduced. There must be value for taxes paid at a local level.

What about looking at it from a private sector point of view…Is it ok to have 30 plus Local Authorities replicating back office functions across the country? It is hugely costly, not sustainable and would not be acceptable in the private sector in current times. We need to protect jobs and we need job creators. We need to continue to compete, innovate and grow while sustaining employment, supporting Irish companies and continuing to attract foreign direct investment. Business is prepared to pay its fair share but not at the expense of jobs and not to bail out unnecessary duplication in the public service.