VAT’s The Way To Do It.
Statement by Brendan Griffin TD (FG) Kerry
Monday, October 14th2013
KERRY Fine Gael TD, Brendan Griffin, has said that the 9% reduced VAT rate should be applied to other sectors of the economy such as construction as well as being kept in place for the hospitality sector.
Deputy Griffin says that he has done all he can in advance of Budget 2014 on this proposal, having raised the matter with Ministers at every opportunity, as well as at Parliamentary Party level and on a number of occasions in the Dáíl chamber.
He said that the government’s decision to reduce VAT on certain services from 13.5% to 9% was an audacious move by the then “new”government in Summer 2011 but has proven itself to be an enormous success. Most analysts agree that 15,000 new jobs have been created by it. Visitor numbers are well up, Irish tourism competitiveness has improved considerably and confidence and investment in the sector has returned.
Deputy Griffin has been told by one hotelier near Killarney that he has been able to employ 35 additional staff because of this innovation and has heard similar stories all over Kerry and all over Ireland.
He has also questioned the €350 million figure associated with the VAT concession.
“€350 is the figure the Department of Finance has presented but others question this. Retail Excellence Ireland, for example, has argued that a Deloitte report has found that net VAT receipts because of the reduction have left €88 million of a hole but when the social protection savings and the income tax revenue from the new jobs is factored in, the figure being €261 million, the State is actually up by a net €173 million. And that €173 million doesn’t factor in the additional tax revenue generated by the spending power of the thousands of newly employed workers or the savings derived from stemming the haemorrhaging of jobs from the affected sectors, which was a major problem prior to the intervention. The Department of Finance disputes these figures but even allowing a huge margin of error of €173 million, at the very worst, the scheme would seem to have paid for itself, a compelling argument for continuation. I have strongly emphasised all of these points both in the Dáil chamber and to the Fine Gael Parliamentary Party.
“I have also argued that this success warrants expansion into other labour intensive sectors like construction for example. About 100,000 people on the live register, almost half of all men on the live register in Ireland, are former construction workers. The industry is on its knees, contributing far less to our overall economic activity (c. 6%) compared to construction industries in most European countries (c. 10%). Given that activity is so low and that much of that activity is state capital investment anyway, meaning that the VAT comes back, surely it wouldn’t be a massive risk to try the 9% trick for construction too.
“I hope that on Tuesday, such a measure for growing construction jobs could be announced. Perhaps there are even further sectors that could receive similar intervention without exposing the State to major risk. It’s surely worth exploring every opportunity.
“The government seems to have found a winning economic formula in the VAT cut and it should be applied where at all possible to grow jobs and help rebuild the economy.”