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Grand Plan

In bullet points: IBEC's plan to generate 25,000 jobs and €2.4bn in tax

The business group’s report on stimulating the domestic economy recommends changes to property tax, pensions, and social welfare payments.

THE BUSINESS LOBBY group IBEC says it has developed a plan which could create 25,000 jobs and add another €2.4 billion in tax revenue at no net cost to the taxpayer.

It also says its plans could increase domestic economy activity by almost €6 billion over the next three years.

In a new report, the group says it has a number of proposals to redirect pension funds into the economy, ensure social welfare payments are spent domestically, and help bring about more ‘normal’ property market activity.

The group’s policy director Brendan Butler  says that Irish residents need to develop more “normal and sustainable spending and saving patterns” to increase activity within the domestic economy, potentially creating thousands of jobs.

Here’s an outline of the IBEC report’s main points:

  • IBEC is calling for a new social welfare card system which would act as an ‘electronic voucher’ to ensure that child benefit payments are spent in the domestic economy, potentially increasing spending within the state by €300 million. It says such a card could be used in much the same way as a laser card to pay for a range of goods and services.
  • Under the proposal, welfare payment recipients would not have to have a bank account to use the card (instead money is transferred electronically and the card is treated as a voucher). It estimates that the introduction of such a scheme would carry “some costs” and could be introduced within three to six months.
  • Pension reforms should be introduced which would allow people use part of their pensions savings earlier than currently possible. It says that given that €20 billion is currently invested in both voluntary contribution and personal pension plans, early access to some of those savings could boost the domestic economy. However, it acknowledges that it is “difficult to stipulate” what people might spend that money on – or how many would choose to access it early.
  • The government should make sure that financial institutions commit to providing “an adequate supply” of mortgage credit while launching a national house price database for market transparency.
  • Certain property tax exemptions should be introduced alongside incremental stamp duty rates to help the housing market. “While it is not in the economic interest of the country for house prices to increase, a return to more normal transaction volumes would bring substantial economic and employment benefits,” according to the report.
  • Home renovation activity could be encouraged using tax incentives or grants to move work from the informal to formal economy, generating Exchequer revenue and jobs.

Launching the report, IBEC’s director of policy Brendan Butler said that the ”domestic economy is stuck in recession and just waiting for things to improve is not an option.”

“Simple and inexpensive steps can be taken to support consumer spending and create jobs. Public finance pressures mean that an exchequer-backed stimulus package is not an option, but government policy can change consumer behaviour and unlock untapped demand in the economy.”

“Now is the time to act,” he added.

Read the IBEC report Unlocking Domestic Demand in full >

Read: Trade surplus widens to over €4 billion >

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