asked the Minister for Finance the cost in 1985 of leaving VAT on new houses at 5 per cent and of reducing VAT on new houses to zero.
Ceisteanna — Questions. Oral Answers. - VAT on New Houses.
18.
It is not possible to forecast with precision the cost of maintaining VAT on new housing at the 5 per cent VAT rate or of reducing VAT to zero per cent. However, it is estimated that the cost in 1985 of maintaining the present 5 per cent rate on new housing could be of the order of £18 million. The cost of reducing the rate to zero per cent from 1 March 1985 could be about £42½ million. These figures take account of the deferment of the VAT increase for private housing to 1 May.
I take it the figure of £18 million for maintaining the existing level is the gross cost. Will the Minister accept that that gross cost, which will probably be reduced to £12 million net, would be a very desirable amount having regard to the impact of the extra 5 per cent VAT on the building industry, unemployment and captial investment? Would he reconsider this position in the Finance Bill?
No.
The Minister should appreciate that he might generate buoyancy if he at least maintained the existing position.
In recent statements the Minister has said that the increased cost per new house will be between £600 and £1,000. In view of the terrible state the construction industry is in would he consider the position?
It is a matter which I have considered over some quite considerable period. I do not see a compelling case to make any further changes.
In view of the fact that something like 50 per cent of people employed in the construction industry two years ago are now unemployed——
Forty-five thousand.
——and the revenue which would accrue if any number of those were contributing by taxation and PRSI, surely there must be a very strong case for some reactivation of this whole construction area, especially when one is talking of £7,000 million of expenditure and the Minister really is talking of something of the order of £15 million to £20 million at the end of the day?
I am tempted to say that Deputy MacSharry has anticipated some of the remarks which I intend to make to Deputy O'Kennedy in connection with Question No. 23 on today's Order Paper. In putting together the budget, I have taken full account of all the buoyancy aspects.
Is the Minister telling me that not just the building industry but those who in one way or another depend on that industry and those employed in it, for the sake of an extra £12 million net, which is what I think it would reasonably amount to, will get a flat refusal to be given any reconsideration? Would he not accept that, having regard to the level of unemployment generally and the impact of the building industry generally on employment — in this instance, on unemployment — this is a matter he should seriously consider? He would probably get even the same revenue in view of buoyancy and activity in the economy as he now will be confined to because of this very shortsighted imposition on the building sector.
The only answer that I can give on that is that the Deputy's figures are wrong.
That is the answer that the Minister is giving to the building construction industry as well.