Last Tuesday’s budget brought good news to most people in the country, especially PAYE workers and those on social welfare. But how did the business community fare out, particularly small businesses, of which there are many in our industry?
Here are some of the key changes that may impact our sector.
VAT changes: The existing VAT registration thresholds of €37,500 for services and €75,000 for goods will now be increased to €40,000 and €80,000 respectively. On the whole, this is seen as a welcome move. However, for our sector, it may not apply as many dealers are already over this threshold. It may be beneficial to those who are involved in repairs and service.
Minimum wage: The minimum wage is going to be increased from €11.30 to €12.70 per hour. This is a 12% increase and will put extra expense and pressure on small businesses who may have several of their staff on the minimum wage.
Cost of living support: Spiraling energy costs, rent and higher material and transport costs not only affect householders. Businesses are also prone to these extra costs when running a business. A €250 million package of temporary supports will be made available to businesses to help them through these challenges. Around 130,000 small and medium businesses will get up to half of their commercial rates back under this scheme.
Increase in carbon tax: From Oct 11th last fuel prices increased as a result of the increase in carbon tax. As already mentioned diesel, petrol and heating costs are already climbing, this makes running a business even more expensive. It will also put pressure on some of our professional customers such as farmers, growers, contractors and landscapers.
The minimum wage increase is probably the single biggest change made in the budget that could have serious knock on effects on small businesses, probably more than the other benefit gains combined. As well as the added expense to the employer, there may be other hidden costs from this increase in the minimum wage. For example, any employee who may have started on the minimum wage and are now on a higher rate because of their loyalty of service may feel a bit hard done by when they see new staff starting on a salary close to their own. It wouldn’t be surprising to see them ask for a pay increase. If they don’t get it, it could lead to low morale, with some staff possibly leaving to look for work elsewhere. Given that we are in full employment, getting in new staff could be a tough challenge. How many businesses can survive these wage increases remains to be seen. Only time will tell.
On the upside, the fact that the average householder will benefit by €1000 or more per year will allow for more disposable income. It will be interesting to see if some of this extra cash will spill into our showrooms.
How will Irish dealers and distributors view budget 2024? Will it be a cheerful Christmas or a Halloween of horrors?
