EU unions back VATcut

by Kathy Watson



European construction unions are calling for a reduction in VAT on building work as a means of both curbing the black economy and promoting job creation.

Pleading the case is the European Federation of Building and Woodworkers which adds to the persistent demands of British building employers for a cut in VAT.

The union federation stated: "VAT rates for building work should be reduced primarily for housing construction, renovation and maintenance.

"It was agreed at the European Council's Luxembourg employment summit that a reduction of VAT rates for labour intensive services would be considered with a view to reducing the scale of the black economy."

Reducing VAT would also create employment and improve the standard of housing.

The main thrust of the federation's policy is that European governments are concentrating excessively on supply-side deregulation rather than a demand-oriented strategy as far as employment is concerned.

It argues that increased public investment to stimulate demand is the most effective way of creating jobs and modernising the infrastructure, and that renovation and modernisation of existing housing should take priority over building new homes.

The federation argues that: "Low labour costs in construction are a disadvantage. They are a disincentive to recruitment and training. The industry will only attract the least able workers.

"Turnover will be high and the more able workers will migrate to better paid regions or other industries. There is also no incentive to use more mechanised techniques and more manufactured components so quality and productivity will suffer."