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Consumers still 'afraid to spend' in climate of uncertainty

The Irish Small and Medium Enterprise Association have hit out at a number of government policies impeding customer spending.

ISME CEO Mark Fielding
ISME CEO Mark Fielding
Image: photocall/Laura Hutton

ECONOMIC UNCERTAINTY IS still acting as a barrier to customer spending, according to the Irish Small and Medium Enterprise Association (ISME).

The reaction comes after new figures were released by the CSO today showing a decrease in both volume and value of sales for the month of June. Overall this year, there has been a 4.8% increase in the volume of sales and a 3.3% increase in the value of sales. These figures were below those projected by the ISME.

The ISME identified property tax, water charges and the next Budget as areas causing uncertainty.

Identifying two actions the government needs to take, CEO Mark Fielding said:

The first message is to state that there will be no more tax increases. Secondly that state investment will increase leading to new jobs and a reduction in state expenditure in social welfare

The ISME also identified the shadow economy as an area in need of addressing. The shadow economy accounts for €20 billion in the Irish economy, 12% of Ireland’s overall €167 billion GDP.

On the impact of the black economy on business, Fielding said: “Because of the social welfare trap where people make more on the dole than in part time work, a lot of people are only willing to work if they are paid under the counter”.

Proposed taxes on retailers of tobacco products were also singled out for criticism by the ISME CEO. Under former Health Minister James Reilly proposals were made for a system where retailers would have to pay annual fees to the Health Department.

On the proposed fees on cigarette retailers, Fielding told TheJournal.ie:

We would regard that as a punitive tax. Retailers in that area under pressure anyway. From the black economy in particular… what some of the economists are saying in government is the tax take has reached a level where if you increase it anymore is that people will stop buying. This is good from a health perspective, but this will also drive people into the black economy.

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The ISME have also hit out at the practice of upward only rent reviews. Earlier this month, Bewley Café were subject to a decision in the high court, ruling against a reduction in its €1.5 million annual rent. Senator Feargal Quinn has brought forward legislation to amend upward only rent reviews.

On the new legislation, Fielding said: “It should really be brought to the Supreme Court. Banks and insurance companies have a serious interest in this. The government are concerned that they could face a raft of compensation claims for loss of rents if they passed legislation”.

READ: Bewley’s has failed to get a reduction in its rental terms

READ: How much tax would a 60c cigarette price hike bring in? (Hint: Not as much as you think)

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