Sector expresses qualified relief at Budget 2003


5 Dec 2002

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There’s been a mixed, if generally relieved, reaction from the technology and business sector to the measures unveiled by the Minister of Finance, Charlie McCreevy TD, in his Budget 2003 presentation yesterday.

ICT Ireland, a division of IBEC, and the representative body for the information communications technology (ICT) sector, focused its ire on the introduction on a range of substantial increases in the cost of credit/laser cards, describing the measure as “effectively a tax on technology”.

Since midnight, the stamp duty on credit and charge cards more than doubled, rising from €19 to €40 annually. It’s estimated that this will yield a further €25.3m for the Exchequer.

The duty applied to cash cards, which are used by customers to withdraw money from their savings accounts, will increase from €6.25 and €10 per card per annum.

Speaking to siliconrepublic.com, the director of ICT Ireland, Brendan Butler, said his primary concern was the message the duty was sending out about the Government’s stated intention to present Ireland as an e-commerce hub.

“The Government has repeatedly claimed that it wants us to move toward electronic business and that it is committed to presenting Ireland as a leader in e-commerce. Our greatest worry (in light of the budget measures) is the signal it is sending out if we want to be a world leader in ICT,” he said.

Butler added that he believed that this branch of e-commerce was one that was proving particularly successful in easing older people into the notion of e-commerce.

“One of the most important developments in recent times in terms of e-commerce has been things like ATM machines where you can simply key in a number and get your money. Basically, it’s a very efficient system,” he said.

“If the changes result in certain categories (of people) no longer availing of such cards, then it’s a retrograde step,” he added.

Butler also expressed concern about the failure of the Minister to introduce tax credits to support increased activity in research and development (R&D).

“It’s well known that Ireland lags behind in this area and we badly need to get industry to invest more in R&D. We were hoping for something to kickstart the process whereby there is some fiscal incentive to invest,” he said.

Butler, however, expressed his satisfaction that the budget appeared to deliver on the Government’s commitment to a competitive corporation tax rate, with continued progress toward a standard rate of 12.5pc.

“Although all foreign multinationals and Irish companies that trade internationally will see an increase in their current rate of 10pc, Ireland remains highly competitive in this respect,” he said.

A satisfied Irish Software Association (ISA) welcomed what it called the Government’s continuing commitment to the National Development Plan and the attempt to control public sector pay.

“The Minister has recognised the current delicate state of the software sector and we welcome the fact that he has not put any further direct cost burden on the ability of technology employers to retain and employ high-skilled workers,” commented Kathryn Raleigh, director of the ISA.

Referring to the Minister’s decision to slap a €100m a year for three years levy on financial institutions, as well as the increase in duties on plastic cards, the Irish Bankers Federation (IBF) said: “We view the decisions as retrograde steps that will impact negatively both on institutions and their customers.”

It added: “The dramatic increases in duties payable on ATM, laser and credit cards will deter the uptake by consumers of these cost-effective instruments. The increases are completely at odds with the Government’s stated support for the development of a payments system based increasingly on electronic and card-based transactions.”

By Suzanne Byrne