Govt should slash VAT on home renovations to 5%
Issued : Sunday 29 March, 2009
Statement by Proinsias De Rossa
Speaking at a workshop at the Labour Party Conference in Mullingar, Dublin Labour MEP Proinsias De Rossa has called on the Government to slash VAT rates from 13.5% to 5% on the labour costs of renovating homes for a limited period to encourage immediate growth in the economy.
Mr De Rossa said: "This measure would complement the Housing Insulation Programme proposed by the Labour Party last autumn and taken up by the Government in February, increase demand and thereby help safeguard jobs, and cut carbon emissions.
"A low VAT scheme like this has operated in the Isle of Man since 2000 and an official study carried out there deemed it a 'huge success', with 96% of participating companies reporting increased business, 43% increased employment, and 64% saying they believed it encouraged houseowners to shun 'cowboy builders' forcing them to register for VAT. A Greek study on a similar VAT reduction said it 'had a direct impact on the revenue of these undertakings [taking part], which indicates that there was an increase in demand", while an independent EU-wide assessment in 2007 concluded there were "real and valid arguments for extending lower VAT rates for some very specific (labour intensive) sectors "
"Every week, thousands of people are losing their jobs and nearly one in every three of these is a building worker. This VAT proposal a proven track record in boosting demand, employment and tackling the problem of the black economy.
"There is considerable evidence that there are still large amounts of SSIA money in bank accounts. A significant and immediate reduction in VAT, on a temporary basis, on the labour costs of home renovations from 13.5% to 5% would encourage take-up of the National Insulation Programme. This is aimed at cutting heating bills, reducing emissions and creating thousands of jobs by insulating roofs and walls, introducing high efficiency boilers and heating control upgrades".
"The Government has up to now resisted this apporachh to stimulating demand. It should now drop that opposition and give thousands of people the opportunity to continuie working." Proinsias De Rossa concluded.
