Tax breaks for builders ‘make no sense’

TAX breaks for the construction industry make no sense when the economy is thriving and their continued existence is down to lobbying in tents at the Galway Races, according to a leading economist.

The tax concessions granted to builders and investors actually cause house prices to rise, and are not needed when there is full employment, said Trinity College Dublin economics lecturer Dr Seán Barrett.

“Pumping up the construction industry makes no sense. This has less to do with economics than going into a tent at the Galway Races,” he said.

Speaking at a conference on Value for Money in the public sector, Dr Barrett said if the construction industry can’t make a profit in a full employment economy, then it would never be profitable.

Also yesterday, a leading accountant said that public bodies should be penalised for sitting on unused land banks. Welcoming Mary Harney’s decision to sell off excess health board lands to raise funds for the health sector, KPMG partner Conall O’Halloran said sales of State lands were very sensible, particularly in a case like the army barracks in Ballincollig, where large sums were involved.

Yet he suggested a levy could be imposed by the Government on the budget of State agencies with hidden assets to force them to either develop or sell off valuable lands.

“I would suggest to the Government that if these bodies had a capital charge, those decisions might have to be taken earlier. If people were feeling the pain of having assets unused, they would move quicker

Addressing the conference organised by Public Affairs Ireland, Mr O’Halloran said that the numbers of senior civil servants getting their full work bonuses shows these rewards are being viewed as an entitlement. On the flip side, he said it was quite difficult for a civil servant to be fired.

“Without the balance between sanctions and rewards, you are not going to get the accountability necessary,” he said.