Index linked income tax thresholds, measures to address business costs and changes to capital gains tax (CGT) are among the measures being called for by Chartered Accountants Ireland (CAI) in its pre-budget submission.The organisation said it wanted the Government do more to support businesses with their costs, with almost 40 per cent of SMEs citing wages as their greatest financial challenge in research it published last month. It said increasing income tax allowances in line with inflation will help to ease the pressure for pay increases from employees and reduce their scale.“Protecting real wages must be the starting point for Budget 2027,” said CAI’s director of members and advocacy, Cróna Clohisey.“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,” she said. The organisation, which has more than 40,000 members and about 8,500 students, also argued for measures to ease the burden on businesses caused by the growing complexity of the current tax system which, it said, is requiring many enterprises to divert resources to its compliance efforts. “A key example of well-intended policy driving complex outcomes is the Enhanced Reporting Requirements (ERR) – specifically the demand for real-time reporting of in-scope payments,” says Clohisey. [ Coalition will not be able to deliver the budget it wants to, says CoveneyOpens in new window ]“ERR has added substantially to the costs and compliance burden of businesses. Moving to a periodic reporting basis would ease that burden while still supporting compliance. This is a straightforward and practical reform that would make a real difference, particularly for SMEs.” In addition, CAI said it wanted to see what it describes as the establishment of a pathway to a more competitive CGT rate. At present, the profit on the sale of an asset is generally taxed at 33 per cent and it wanted to see a substantial reduction over the coming years.“A more competitive capital gains tax regime is essential if Ireland is to support investment and encourage long-term economic activity,” says Clohisey. “The current rate remains high by international standards and has a material impact on business and investment decisions. “We are recommending that the rate of CGT in Ireland should be progressively reduced to at least 20 per cent to support capital formation, improve market activity and encourage more commercially driven investment decisions. This is critical to supporting business expansion, innovation and long-term economic growth.“Without action in Budget 2027, cost pressures and competitiveness challenges will continue to intensify for Irish businesses.” The submission follows the recent publication by CAI, with Grid Finance, of its third six monthly survey of SMEs which found falling confidence among respondents about their financial outlook.More than half of the companies surveyed said increased costs were the biggest issue they faced with regard to maintaining competitiveness.The war in the Middle East is one of the international factors to have contributed to a heightened sense of uncertainty across the SME sector with almost half saying they believed geopolitical tensions and associated supply chain cost increases would be the greatest challenge to their business in the coming year.A third, meanwhile, said energy costs were a particular source of concern and while almost half, 47 per cent, said they need supports with their energy costs, almost the same number said the existing system of supports is ineffective.The budget is due to be announced on October 6th.