Irish businesses are contending with persistent increases in labour and operating costs, Chartered Accountants Ireland (CAI) said as it publishes its pre-Budget submission.
New survey results from the institute indicate that 40% of small and medium-sized enterprises (SMEs) identify staff costs as their main financial difficulty, while a further 30% point to rising operational expenses.
The organisation says these pressures are limiting the capacity of companies to “compete, invest and grow”.
The submission also highlights increasing complexity in the tax system, which, it argues, is adding to administrative workloads and costs, particularly for smaller enterprises, by diverting resources from core business activity.
CAI is calling for income tax thresholds and credits to be linked to inflation in order to protect real wages and curb fiscal drag.
It noted that this measure would support employees and employers in the current cost environment, where attracting and retaining staff is becoming more challenging.
CAI Members and Advocacy director Cróna Clohisey said: “Protecting real wages must be the starting point for Budget 2027. Without action, workers will continue to see their take-home pay eroded while employers face growing pressure to increase wages.
“Indexing income tax thresholds and credits in line with inflation is a practical step that will help support both workers and employers in the current cost environment.
“Without this, we risk putting further strain on employers and undermining competitiveness in the economy.”
CAI said professional service providers raised equity concerns regarding two specific elements of the Irish tax system.
First, they advocate for eliminating benefit-in-kind charges on employer-funded professional subscriptions. Second, they propose abolishing the 3% Universal Social Charge surcharge on specific non-employment income to eliminate the arbitrary distinction between different income streams
The institute also places emphasis on strengthening Ireland’s investment climate.
It calls for a clearer route towards a more competitive capital gains tax rate, changes to the taxation of retail investment, including the creation of an Investment Account, and measures designed to support capital formation and improve market liquidity.
According to the submission, these steps are intended to help ensure Ireland remains an attractive investment location and that businesses can access the capital required to expand and innovate.
CAI recently appointed Joan Curry as its new president.
