AXING stamp duty could give a badly needed boost to the property market, the Construction Industry Federation (CIF) argued yesterday.
In its pre-Budget submission, the CIF called for a temporary scrapping of the tax to help kick-start residential and commercial sales again.
CIF director general Tom Parlon said the levy was a nonsense given the near total absence of activity in the property market.
The organisation also called for action to stamp out rogue builders costing the state up to €250 million annually in lost taxes.
On stamp duty, Mr Parlon said: “Persisting with a high transaction tax when there are no transactions makes no sense, either from the economy’s or the Exchequer’s perspective.
“Introducing a 0% stamp duty rate may encourage more interest in commercial and residential property transactions and therefore generate additional incomes for the state.”
He said that duty should be phased out and replaced by an “alternative, more reliable and fair tax”.
The CIF boss insisted the Government must make job retention and development a primary goal of its four-year budgetary policy.
He also urged the Government to address rigidities in the tax system to encourage renewed private sector investment in the domestic economy, including the residential and commercial property sectors.
The CIF warned the Government’s fiscal consolidation targets would not be achieved without economic and employment growth.
For that to happen the Government has to protect productive spending in the Budget, it said.
The Capital Investment Programme is particularly crucial and further cuts “will only serve to further depress economic activity and put more pressure on the Exchequer as a result of further unemployment. Cutting productive investment is a false economy,” said the construction body.
Accepting the need for cuts, the CIF said: “How you go about doing this will determine whether or not the economy, and employment, returns to their medium-term potential.
“Further cutting capital investment and raising the tax burden on families and businesses to try to balance the books is not a sustainable approach.”
The previous over-reliance on transaction taxes is a case in point and the CIF submission supports the broadening of the tax net, it said. To minimise the damage to the economy, the balance of adjustment should be on current spending, the submission said.
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