Stealth house taxes ‘put thousands of jobs at risk’

THOUSANDS of jobs and millions of euro in investment will be lost because of the sharp rise in development levies by local authorities, the IDA and construction industry have warned.

The business lobby group IBEC has also written to Taoiseach Bertie Ahern outlining “strong reservations” about the introduction of the stealth taxes by local authorities to fund roads, drainage, parks and community centres.

The levies, introduced by Environment Minister Martin Cullen, will also hit househunters, adding up to €20,000 to the price of a new house.

Don O’Sullivan of the Construction Industry Federation said Foreign Direct Investment will be forced to go elsewhere because of spiralling costs and an increasingly hostile business environment.

He said development levies in the Dublin area are set to rise from €30 per square metre to €100 from January 1.

The increase would add anything from €500,000 and €2 million to the cost of development on typical commercial properties which range from 5,000 to 30,000 square metres.

To put that in context, if the Intel $2.5bn investment in Leixlip, Co Kildare, was in place when the Fab 24 plant was being built the extra cost would have been €4 million, Mr O’Sullivan said.

IDA spokesman Colm Donlon supported the CIF’s concerns and warned unless the various councils produced a transparent charge list there would be trouble ahead from an investment point of view.

Last week, a major row erupted between IDA Ireland and Wicklow County Council after the council tried to impose a further €400,000 development charge on Vitra Tiles, Arklow, although IDA previously paid €400,000 in development costs to the council.

Infrastructure provision is currently funded primarily by central Government and from development levy contributions. The contributions have increased sharply in recent years, reaching €122 million in 2001.

However, the draft schemes published so far indicate that the levy is likely to increase sharply when the new regime comes into force.

IBEC estimates that the contribution for Fingal County Council would increase from €15 million in 2001 to €52 million in 2004, while in Cork County Council the estimated increase is from €10 million to €23 million over the same period.

As costs rise, figures show that job losses in multinational firms topped 10,000 each year for the past three years.

In 2001 and 2002 the net number of jobs lost were 4,500 and 3,200 respectively as US multinationals battled with rising costs.

With Government finances under pressure, Mr Cullen has repeatedly defended the imposition of development levies by local authorities. The Taoiseach also defended them, telling the Dáil they were “an advance in social thinking and should be welcomed”.