CIF calls for budget tax breaks and stamp duty reduction

Tue, Nov 10, 2009, 00:00

TAX BREAKS for first-time house buyers, a reduction in stamp duty and reform of the planning system are all on this year’s budget shopping list for the Construction Industry Federation (CIF) .

The organisation, which represents the building industry, argued at the launch of its pre-Budget submission yesterday that the sector should be central to the Government’s recovery plans.

The federation is recommending that the Government introduce a time-limited tax break for first-time house buyers and abolish residential stamp duty.

Vice president, Matt Gallagher, pointed out that there are between 35,000 and 40,000 unsold new homes in the Republic.

He said that up to €1.2 billion in VAT is “trapped” in these properties, and could be released to benefit State coffers if they were sold.

Mr Gallagher added that giving first-time buyers a tax credit would ensure that they, rather than builders, would benefit directly.

He said that once houses started to sell, the industry would start moving again. “Builders will go back and start building and we can back up to meeting the natural rate of demand over the next three to four years,” he predicted.

The federation has pointed out that natural demand for new homes should run at 45,000 to 60,000 a-year, and has warned that the virtual standstill in house building will create a future shortage.

Federation director, Tom Parlon, says that current stamp duty rates on commercial buildings are acting as a barrier to inward investment. The CIF is calling for this to be cut to 4 per cent to bring it into line with the charges that apply elsewhere in Europe.

Mr Parlon said there are signs that falling costs and wages are beginning to make the Republic more attractive to mobile investors, but he said that the extra 2 per cent payable on commercial building transactions acts as a disincentive.

Up to 300,000 builders will have lost their jobs by the end of next year if action is not taken to ease the impact of the recession on their industry. CIF vice president, Philip Crampton, said that 200,000 jobs have been lost in the industry since it hit a peak in 2007 and warned that the building business is now in crisis.

“We will be down another 100,000 by this time next year if no action is taken,” Mr Crampton, who runs one of the Republic’s biggest building firms, warned.

The federation’s submission calls on the Government to deliver on its promise to spend money on road building, schools, public transport and waste water treatment facilities.

The group argues that investment in labour intensive and badly needed construction projects such as these offers the most immediate way of securing jobs in the industry and supporting economic recovery.

According to Mr Parlon, costs are down by around 20 per cent, so the State can get better value than in recent years.

The federation has already called for a national partnership forum for the industry, involving employers, workers and all other stakeholders.