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Tue November 24 2020

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Call for Ireland to reduce VAT on construction

8 Oct 13 Ireland’s Construction Industry Federation (CIF) has called for the VAT reduction in the restaurant sector to be transferred to construction sector instead.

CIF wants the government to reduce construction VAT by 13.5% to 9% on a temporary basis in the coming budget. It believes that reducing construction VAT will help encourage private sector investment and this will have a dramatic impact on the number of construction jobs available throughout the country. There is a belief throughout the construction sector that the industry is on the verge of a return to growth and that a push in the right direction from government, such as in the form of a VAT reduction, would have a major impact on job creation and activity levels, said CIF.

According to the CIF’s calculations a 12% increase in private sector construction investment would more than cover the cost of the VAT reduction in purely fiscal terms. In addition there would be political and social benefits throughout the country derived from the increase in job opportunities, knock-on spending and improved infrastructure, housing and commercial property.

Speaking about their proposal, CIF Director General Tom Parlon said: “Reducing the VAT rate for the construction sector makes sense on many different levels. The government has realized the quickest way to boost the employment situation is to get the construction sector working. To achieve that we will need to see the private sector investing in construction activity again and the best way of encouraging that activity is to reduce the construction VAT rate.

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“The restaurant and hospitality sector should be applauded for how they have managed their VAT rate reduction. It has an obvious beneficial impact on the turnover of the sector and on creating jobs. However that rate was introduced for a two year period to help tide the sector over a difficult period and it has achieved that goal. Given how much it is costing the Exchequer, with it estimated at approximately €350m [£296m] per year this reduction should now be taken off the menu by the government.

“The restaurant and hospitality sector are thriving, they don’t need the assistance anymore. If this country wants to create a lot more jobs then the construction sector offers a lot more scope for growth. We have seen what the VAT reduction has done for the restaurant and hospitality sector and we think it could have a similar impact on the construction sector if it was introduced on a temporary basis.”

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