Blemish on the face of the Budget
Our neighbours in Britain in recent times have been concerned at their description in certain international quarters as ‘wingeing Poms’ and perhaps the Irish have now to share a similar concern, certainly in recent times when the rise of the so-called Celtic Tiger seems to have been accompanied by an unprecedented level of national dissatisfaction.
The Budget for 2001, announced this month, has been accompanied by a chorus of wingeing again, despite its overall positive thrust, we would say, echoing the prognostications of the panel of economists polled in these columns in September. A headline recommendation of our group was for a 2 p.c. cut in the top tax rate, and it, as well as other recommendations, were implemented in broad measure.
However, there was a blemish on the face of this Budget, and, subject to our reluctance to add to the chorus of dissatisfaction we must draw attention to it.
The blemish was the negative signal sent out to the financial services industry, and indeed any other industry which is now trying to follow the path towards higher value added employment creation, the only way forward for the Irish economy in a developmental direction in the form of the abolition of the upper ceiling on the employers’ PRSI contribution re employees. This adds, at a stroke, 12 percentage points to the cost of paying wages to employees over and above a salary level of ?36,000 from now on a shocking once-off increase. This is a fiscal message that says ‘we are not interested in developing high added value and high wage employment in this country’. Why we should want to do so remains, for now, a mystery.
Perhaps a more positive answer will come in the Finance Bill. It is however also the case that the forthcoming fiscal year is only a 75 p.c. year, (April-December) and this will mitigate the bite of this move, and setting the scene for a cut in next December’s Budget of the rate of employer PRSI contributions in FY 2002. Let the campaign begin now.
SRA?
Perhaps when the excitement of the Budget has died down somewhat, Mr McCreevy will have the time to sit down with Mary Harney and resolve the issue of the Single Regulatory Authority once and for all. Disappointingly, despite Mary Harney’s affirmation that a decision was ‘imminent’, as readers will remember from the October issue, two months later we are still none the wiser.
Code of ethics
Regulation and standards go hand in hand with ethics, and the Irish Bankers Federation took up the challenge of introducing an Industry Code of Ethics. It is a move to be welcomed and embraced in other sectors. In launching the code president of the association Sean Fitzpatrick asks ‘does Ireland really need an indigenous banking industry at all?’ and calls for a debate on Ireland’s financial industry future. His address is on page 7.
Review of the year
And of course just as every December brings with it the buzz of Christmas shopping, so too does it give a chance for a review of the year gone by. Taking on board the dynamism within many industry sectors this year we’ve invited industry leaders in investment management, life assurance, corporate law, accounting and corporate finance to give us their views on the past twelve months. One word could sum them up - busy. The feeling from these articles is that the year has been a memorably busy one for all involved. Outlooks for 2001 are good to muted, though with the expectation in some sectors that a slow down is on the way.
PLC survey
CRH’s dominance as Ireland’s best rated company is becoming legendary, with the company winning a plethora of awards on a frequent basis, including the Finance plc survey published in this month’s issue. What can explain this? According to the Finance plc survey the management is highly rated and the performance has lived up to expectations making it the fund managers darling. But the steady situation at the top makes us wonder if CRH can ever be toppled from its perch - will other Irish companies ever be this good? |
