It is clear the Government is working on a strategy to mitigate, as far as possible, the potential impact of Brexit on businesses and the economy. The Government has confirmed it is fully engaged with the challenges Brexit presents. Its vision is that Ireland will take responsibility and shape its own destiny.
Given the uncertainty and apprehension of Irish businesses about the potential impact of Brexit, I think that the 2018 Budget provides measures that will be broadly welcomed by certain sectors, mainly SMEs and agriculture.
The announcement of the provision of Brexit-specific loan schemes with investment of up to €325m is a positive measure.
The announcement of the provision of Brexit-specific loan schemes with investment of up to €325m is a positive measure. The allocation of additional resources to both the Department for Business, Enterprise and Innovation and the Department for Agriculture, Food and the Marine is also encouraging.
The measures will help to maintain Ireland’s competitiveness in international markets and support challenges that businesses will face as a result of Brexit. I see this investment as critical for indigenous businesses in exposed sectors such as agriculture, food, drink and hospitality, which need to remain competitive in a post-Brexit environment.
From an international trade perspective, it was disappointing that we didn’t see the introduction of funding for companies to upskill in terms of their knowledge of customs, their access to export markets and their use of EU preferential trade agreements with third countries. Such knowledge is in short supply within the Irish economy, but will be critical for business post-Brexit.
While some businesses and industry bodies have been calling for wider Brexit actions, the Government is restricted in what it can do from a customs and trade perspective. Ireland is subject to EU policy and legislation and the Government can’t put in place any special trade arrangements between Ireland and the UK outside of those parameters. Customs and trade are the remit of the European Commission.
With much noise in recent weeks, and with negotiations now at a critical juncture, I encourage businesses to consider their Brexit exposure and readiness.
The introduction of a Sugar tax on sugar sweetened drinks has been flagged for a number of years and was first introduced in the 2017 Budget by the Minister for Finance. It was anticipated that further details on the operation of the tax would be made available once the public consultation period closed earlier this year.
When introduced, it’s expected that the tax will be levied on manufacturers and importers, rather than being imposed directly on consumers at the point of sale, and we expect that it will take the form of an excise tax. While no significant details were provided in the Budget, we await further details on the impact for Irish businesses and the Irish consumer.
Sugar tax will be introduced from 1 April 2018. It is expected that the introduction of this tax will impose both additional costs and compliance requirements and with the short lead time to its introduction, could result in a significant burden for affected businesses.
The rates to be introduced are €0.30 per litre (for sugar sweetened drinks with a sugar content in excess of 8g per 100ml) and a reduced rate of €0.20 per litre (5-8g per 100ml). The tax is expected to generate €30m in 2018 and €40m in a full year.
Overall, I view the 2018 Budget as a positive one in terms of the provision of Brexit support for Irish businesses as we face the challenges and uncertainties over the fracture of the single market. More will be required as Irish business prepares for a post-Brexit economy and our future trading relationship with the UK.
John leads the Global Trade and Customs practice in PwC Ireland, with extensive experience in dealing with customs and trade matters.
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The 2018 Budget should provide reassurance that the Government has a strategy to mitigate the impact of Brexit.