Reducing VAT on energy upgrade works will create jobs

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IBEC’s Danny McCoy summed up the current dilemma very neatly recently on RTE’s Primetime. Talking about such positives as continuing export growth and positive balance of payments, he found himself accused of just wanting to “get the good news out there”.
 
The IBEC Director General rounded on the interviewer saying: No, these are the facts. He is right. These are the real facts – as opposed to the speculation and pessimistic forecasts which daily are spoken about as if they were the facts.
 
The real facts of our situation here got a fair and balanced airing in the Financial Times on Thursday. The article concluded saying: “…the Irish deserve to be applauded for their pragmatism. Their tragedy is that eurozone leaders have not displayed similar cohesion or level-headedness in recent weeks.”
 
It is a fair observation and one that we should be more focussed on. Enda Kenny keeps reminding us of his and great standing in the European People’s Party. Maybe he could have used that influence for some good and made a call to his party colleagues in Angela Merkel’s government and advise them of the uncertainty and potential; harm their ill-informed comments were causing here.
 
One five minute call to his German allies would have done a great deal more for the future of this country than all his tub-thumping and pontificating.. It is not too late, however, for Eamon Gilmore to contact his comrades in the UK Labour Party to stop them talking down Ireland by claiming that we have entered a double dip. But that might be a bit too productive and positive an action for either Kenny or Gilmore to attempt when there are political points to score at home.
 
Luckily the joint statement issued by Britain, France, Germany and Spain after the G20 meeting appears to have re-established EU solidarity and clarity.
 
One politician who has focussed on contributing positively to the situation at home in recent weeks is the Louth Fianna Fáil Senator, James Carroll.
 
He has proposed reducing the VAT on all energy upgrade and repairs in private homes to 5% as a stimulus measure along the lines of the car scrappage scheme.
 
The VAT reduction (which would be permitted under the EU Directive Six) would apply to building supplies and to labour and, as this is a particularly labour intensive area, it would give a much need shot in the arm to the depressed construction sector and benefit hundreds, if not thousands of unemployed building workers.
 
The scope for job creation here is considerable, as there is a huge potential market. There are just under 1million homes in this country built prior to 1990 and before the introduction of the Building Control Act.
 
The Home Energy Saving Scheme which was piloted back in early 2009 now attracts about 1,000 applicants a month and employs in the region of 5,000 people.
 
The Experian Report on the Opportunities and Costs of Cutting VAT, which was published in February outlined the effectiveness of the measure when taken in other European countries such as Italy, France and the UK.
 
95% of surveyed contractors in the Isle of Man said that they believed that their level of business had increased after the implementation of the VAT reduction and 40% believed that it encouraged consumers to have work done.
 
If the job creation benefit of this proposal was not enough in itself to recommend this proposal – and it is – there are a number of other clear and tangible benefits. It would help to tackle the black economy. It could reduce people’s domestic fuel bills. It would help the Government to achieve its own target of reducing carbon emissions.
 
Like a number of the ideas I have put forward here over the past few months, it has several benefits, most of which are realisable in the short to medium term. Kenny and Gilmore take note – this is how positive and productive politics can be when done right.

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