Hi Barra, enjoyed this piece - you lay out the (il)logic of cutting VAT clearly for someone who doesn't understand these things very well.
I wonder if you'd have a view on the suggestion of cutting VAT on construction services (also currently 13.5%)? This was argued yesterday by Claire McManus, RIAI spokesperson on housing, as an alternative to the (admittedly ill-judged) reduction in apartment standards, and as a more effective means of reducing the sales price of new apartments - https://www.rte.ie/radio/radio1/clips/22529463/?ct=t(EMAIL_CAMPAIGN_3_28_2025_9_55_COPY_01)
It seems likely that developers and/or building contractors - like their counterparts in hospitality - would just pocket the difference though, with a cut to valuers and realtors for keeping property prices on an upward trajectory.
Ignoring who’d benefit from the tax cut for a second, it’d seem obviously less effective in delivering more homes (which, aiui, is the goal of the government’s changes rather than reducing house prices).
Construction is currently at full employment, and our support systems for the construction industry (planning, haulage and the like) seem to be similarly at capacity. Reducing VAT on construction won’t change this in the short term, and will only change this via higher wages for construction workers in the medium term. Reducing the number of lifts per apartment or the size of apartments will both let us build more apartments per worker (because the apartments will be worse, basically).
Hi Barra, enjoyed this piece - you lay out the (il)logic of cutting VAT clearly for someone who doesn't understand these things very well.
I wonder if you'd have a view on the suggestion of cutting VAT on construction services (also currently 13.5%)? This was argued yesterday by Claire McManus, RIAI spokesperson on housing, as an alternative to the (admittedly ill-judged) reduction in apartment standards, and as a more effective means of reducing the sales price of new apartments - https://www.rte.ie/radio/radio1/clips/22529463/?ct=t(EMAIL_CAMPAIGN_3_28_2025_9_55_COPY_01)
It seems likely that developers and/or building contractors - like their counterparts in hospitality - would just pocket the difference though, with a cut to valuers and realtors for keeping property prices on an upward trajectory.
Any thoughts?
Ignoring who’d benefit from the tax cut for a second, it’d seem obviously less effective in delivering more homes (which, aiui, is the goal of the government’s changes rather than reducing house prices).
Construction is currently at full employment, and our support systems for the construction industry (planning, haulage and the like) seem to be similarly at capacity. Reducing VAT on construction won’t change this in the short term, and will only change this via higher wages for construction workers in the medium term. Reducing the number of lifts per apartment or the size of apartments will both let us build more apartments per worker (because the apartments will be worse, basically).