The Government must consider the impact of its proposed concrete levy on first-time housebuyers and others, the Construction Industry Federation (CIF) has told Minister for Finance Paschal Donohoe.
The Minister announced a 10 per cent levy on concrete products in last month’s budget to help foot the compensation bill for defective building materials.
CIF president Frank Kelly and director general Tom Parlon are calling for a regulatory and economic impact assessment of the proposed tax in a letter to Mr Donohoe delivered on Friday.
“The proposed levy is a blunt instrument, which is not targeting those responsible for defects,” they argue.
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“The first-time buyer, public and private client will ultimately pay the cost of this and the potential budgetary revenue from the measure is unlikely to be achieved due to its wider consequences.”
The letter adds to the pressure on Government over the proposal, which reports say the Coalition is already reconsidering.
A policy document sent to the Minister with the letter states that the Society of Chartered Surveyors in Ireland has calculated that the levy could add between €2,000 and €4,000 to the cost of a new home.
The CIF itself estimates that it could increase the bill for big building projects, including public developments for which taxpayers ultimately pay.
Federation figures show that the levy could add from €100,000 to €300,000 to the cost of a project valued between €20 million and €50 million.
The tax could add between €350,000 and €400,000 to developments priced between €50 million and €100 million, the CIF says.
Those extra costs represent up to half a contractor’s margin, so would undermine builders’ ability to raise cash to fund these projects.
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Builders will have to pay between €350,000 and €700,000 more a year for concrete if the Government applies the levy.
“These costs must be passed on to the client or new homeowner,” says the federation.
The CIF adds that if contractors cannot pass on the costs, this would put their businesses and workers at risk.
Concrete prices rose 10 per cent in September and are likely to increase by the same amount again in January as energy costs continue soaring.
Builders are already wrestling with the highest inflation they have seen in 40 years, the CIF warns.
The levy will add to the cost of projects for which builders have already tendered while public works contracts will not compensate companies for the tax, says the letter.
“Therefore, businesses who have no responsibility for the defects will be expected to fund the proposed levy from their own resources,” Mr Kelly and Mr Parlon warn.
“This is simply unfair and damaging to an already financially stressed industry,” they add.
