Source: Sandra Ubben¸ PKF Malta¸ 15 December 2011

The Irish government is about to raise taxes next year to whip the troubled budget of Ireland into shape. The key issue is the increase of the VAT over two points (from 21 to 23 per cent) to save €3.8 billion—effective January 1^st¸ 2012. This increase will affect a broad range of goods and services¸ including motor vehicles¸ petrol¸ electrical goods and alcohol. It has been estimated that the VAT rate increase will generate approximately €670 million for the Irish Exchequer in 2012.

“The most important goal is to create jobs¸” said Michael Noonan¸ Minister of Finance of Ireland. Next year¸ Irelands economic is expected to grow by 1.3%.

The Irish Small & Medium Enterprises Association ISME¸ has criticized the government on their handling of the budget. They characterize the austerity of the budget as “smoke and mirrors”. The increase of the VAT may push many companies over the edge¸ which will lead the Ministers’ goal to the exact opposite of what they intend—namely¸ to a reduction of jobs. The Government’s aim to create a ‘Jobs Budget’ is a bad joke¸ with the imposition of further costs on business. The penny needs to drop; you cannot consistently increase taxes on business and expect to create new jobs. It is irrational¸ illogical and shows an economic ignorance unworthy of government.