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Irish Independent
15-07-2025
- Business
- Irish Independent
Cut the Vat rate on new apartments to 5pc, Ibec proposes
In a pre-budget submission, Ibec says there is a clear social need to improve the viability of apartment building in Ireland, as completions fell by 25pc last year and the construction pipeline has slowed to a crawl. 'Direct costs imposed by the State, such as Vat and development levies, are the most direct mechanism to reduce costs of delivery in the very short term,' the submission said. Sales of new apartments by developers currently qualify for a reduced Vat rate of 13.5pc. Development levies are paid to councils, and are intended to fund infrastructure such as water and roads. Each council sets its own rate. The levies were suspended for a time last year, leading to a temporary spike in the number of housing commencements. Gerard Brady, the chief economist at Ibec, said its proposal would cut the cost of building an apartment by €50,000 to €60,000, and would cost the Exchequer about €86m overall. 'It's hard to know how many apartments will be built this year at all, because of viability,' he said. 'The regulatory changes on redesigning will lead to more apartments in the long run, but developers might need to go back to planning, so the number might slow in the short term.' On the general economic position, Ibec said the budget-day package should be a maximum of €3bn net this year, with about €232m of new measures paid for out of the National Training Fund surplus and €1.3bn in new infrastructure spending. 'The current environment at a global level is one of slower growth and an increased risk of instability in global debt markets,' the submission said. 'Ireland is in a good position in terms of our headline debt and deficits. However, much of this position has been funded by a single source – corporate tax.' Ibec pointed out that the Irish government has collected €113bn in corporate tax revenues since 2019. While some countries that are investment hubs – such as Switzerland and the Netherlands – have also seen significant rises in corporate tax, Ireland is an outlier. The amount of corporate tax per worker here has risen from $3,080 in 2014, which was broadly in line with similar countries, to $9,743 in 2023. If Ireland had stayed in line with the likes of Switzerland and the Netherlands, it would have collected €45bn less in tax over that decade. 'If Ireland only collected a similar amount of corporate tax per worker as comparable economies, then every worker in the country would need to pay €4,000 per year more in income or other taxes,' it said. 'In Ibec's view, a sensible economic policy would aim to return to a balance of income over expenditure, were our corporate tax receipts to be realigned with other mid-sized globalised economies. In 2025, that gap is around €5bn.' Ibec is proposing an improvement to the R&D tax credit as a way of attracting and embedding high-value activity in Ireland.
RTÉ News
14-07-2025
- Business
- RTÉ News
Budget 2026 must be 'sensible and prudent'
Business group Ibec has said Budget 2026 must be "sensible and prudent" given the fragile global environment. Launching its pre-budget submission, it urged the Government to take a "measured and strategic approach". The group has also called for targeted investment in areas that enhance productivity and competitiveness. It said sound economic policy must focus on restoring a balance between income and expenditure over the coming years and reduce the over-reliance on volatile tax receipts, such as corporation tax. Ibec also warned that "persistent or emerging tariffs pose a serious threat to Irish business" and it said the economic model Ireland has relied on for the past 50 years is under serious strain. It said while the broader economy may remain resilient, "some sectors will suffer significant and lasting damage to competitiveness". As part of its submission, Ibec said such impacted businesses and their employees must receive targeted support, such as measures on PRSI and trade supports. Ireland needs to 'make right choices' Ibec's Chief Economist and Head of National Policy Gerard Brady said the budget must be framed in the context of ongoing trade tensions and recent US tax reforms Mr Brady said Ireland needs to "make the right choices to safeguard our competitiveness and ability to attract and retain business". "That means investing in productivity focused areas like infrastructure and committing to continue that investment regardless of the economic climate," he added. Ibec also said the high cost of doing business here needs to be addressed and it said more needs to be done on skills and innovation. Mr Brady urged the Government to use funding from the National Training Fund "to make sure that we're investing in skills, particularly at a time where there's significant change in the labuor force due to AI and other new technologies." Mr Brady said: "Ireland still falls short of where it needs to be as an innovation leader and R&D performer." In order to assist in attracting investment, he called on the Government to enhance and widen the scope of the R&D tax credit, which he believes would make Ireland "more attractive investment, both for Irish companies and for multinationals". "Other measures take time to see the benefits for business on things like infrastructure and skills. R&D tax credit would work 1 January," he added. He said the scheme should be expanded to include process innovation, AI, and green technologies. "Allow application to offshore related-party research (with safeguards), provided IP and value remain in Ireland." €3bn budget package proposed Among the other measures in its submission, Ibec has proposed a budget package of €3bn, including €1.3bn in additional infrastructure spending under the National Development Plan. And the business group has called on the Government to "maintain a strong, predictable capital investment pipeline". It said public investment should be "prioritised above all other fiscal commitments." In relation to tariffs, Ibec's Executive Director of Lobbying and Influence Fergal O'Brien said the group is hoping for a framework agreement. Mr O'Brien said Budget 2026 is going to be "predominantly about the stress and pressure in our traded economy, and the uncertainty that the potential global trade war continues to have on the economy". He said the 10% rate, which is currently in effect, is "materially hurting" low margin businesses particularly in the food and drink sectors. "That 10% hurts, especially when you layer it on top of the dollar weakness of pretty much the same scale that we've seen since the start of the year." Mr O'Brien said if the threatened 30% tariff did become a reality, "it will be extremely damaging". He said Ibec members also have "a lot of concerns" about what countermeasures will be introduced by the EU.
Irish Examiner
14-07-2025
- Business
- Irish Examiner
Ibec said Government should aim for balanced budget without additional corporation tax receipts
Business group Ibec has called for the Government to produce a balanced budget later this year, which does not rely on excess corporation tax receipts and makes investment in infrastructure its number one fiscal priority. In its pre-budget submission, Ibec has recommended a budget day package of €3bn, with an additional €1.3bn in infrastructure spending under the National Development Plan. Within this infrastructure spending, it is calling for an additional €250m to fund water and wastewater infrastructure. To incentivise the building of apartments — of which there has been a significant falloff in recent years — Ibec is seeking a reduction on Vat on new-build apartments to 5%, as well as discontinuing levies on new-build apartments. This will cost €86m, according to the business group. It is also calls for the Government to resource a single-entity to take on 'the statutory powers of oversight, co-ordination and prioritisation of large infrastructure projects through the planning and consenting systems'. On the tax side, it is seeking to index the top tax band to wage growth by increasing by €2,000, as well as adjustment to tax credits It is also calling for the introduction of a National Training Fund voucher scheme to engage more employers in workforce development. Ibec chief economist Gerard Brady said if Irish corporation tax receipts per worker were on par with tax receipts in other globalised countries such as Switzerland and the Netherlands, then the Government would be running an underlying budget deficit of €5bn a year. He said it was 'really important' in this budget, and other forthcoming budgets, that 'we set out a really strong framework for multi-annual funding of infrastructure'. 'That we make it very clear that above any other fiscal priority, that infrastructure takes the number one in that list, and that it is protected.. We need to be very clear on that to be able to get the capacity into the economy to deliver on major infrastructure projects,' he said. Mr Brady said the budget must be framed in the context of the ongoing trade tensions and tax reforms in the US. We need to make the right choices to safeguard our competitiveness and ability to attract and retain business." The group's pre-budget submission comes after US president Donald Trump announced he would implement a 30% tariff on EU goods entering the US from August 1, which could have a significant impact on the country's exports. Fergal O'Brien, executive director of lobbying and influence at Ibec, said this was a budget that was going to be 'predominantly about the stress and pressure in our traded economy and the uncertainty that the potential global trade war continues to have on the economy'. Mr O'Brien said the upcoming budget needed to be 'sensible' and 'prudent', that moves the country back towards an 'underlying balance' when excess corporation tax receipts are not accounted for. On the issue of tariffs, Mr O'Brien said even the current US tariff rate of 10% was 'materially hurting a lot of businesses' particularly in the food and drink sector of the economy. Adding to the pressure on these businesses is the growing strength of the euro against the dollar, which is increasing export prices. Read More Two pubs a week now closing in Ireland, one in three in Cork and Limerick gone since 2005
