Cowen urged to index tax bands

THE construction industry have asked Finance Minister Brian Cowen to index the taxation bands in December’s Budget.

In its pre-Budget submission, the Construction Industry Federation (CIF) says indexing the bands would greatly benefit workers in its sector, many of whom pay tax at the standard rate.

The CIF says Mr Cowen must look at a number of issues in his first budget and ensure that economic growth is not damaged and that investment in capital projects must be maintained to keep the economy growing and ensuring development of our infrastructure.

"However, the CIF is concerned that capital spending is €568m or 10% behind the spending target published for 2004. This is a substantial rate of underspend after seven months of the year and suggests that the Government's investment target of 5% of GNP in public infrastructure will not be achieved for the second year in a row."

The CIF is calling for spending on infrastructure to be set at the 5% level for the next number of years and that outside of this the Government should increase the number of public private partnerships to speed up the development of major project.

The CIF said it was also concerned about the "steady erosion of Ireland's competitiveness" and that controlling current expenditure and ensuring no further stealth taxes should also be a priority for the minister.

The federation said levies, such as a waste disposal charges, should not be seen by local authorities as a source of revenues and that a review by central government needs to carried out as to how charges should be imposed. While the CIF supports pay increases for workers it says the cost of increased redundancy payments should come from the Social Insurance Fund. "The cost of paying statutory redundancy to a worker under the age of 40 after two years of service has increased from €1,016 to €3,000 compared to three years ago.

"The CIF believes the cost of redundancy should be met wholly from the employers' current contribution to the Social Insurance Fund rather than at a rate of 60% from the fund as currently."

The CIF added that over the years it has expressed concern about the impact of stamp duty on the housing and property markets and is looking for a review by the Department of Finance of tax laws in this area.

"The market in land, commercial and industrial buildings and in residential accommodation need to work as efficiently and smoothly as possible. Taxes on transactions always have the effect of inhibiting transaction volume for no economic purpose, other than the raising of revenue. The Budget 2003 increase in stamp duty should, the CIF believe, never have been imposed in the first instance and should be reversed at the earliest possible opportunity."