Minister for Finance Brian Lenihan has said the construction sector has been at the vortex of this economic downturn and it will be some time before the sector returns to a sustainable level of output.
In the meantime, he said, the Government wants to ensure that existing employment levels are protected and allowed to grow by reducing black economy opportunities in the industry
He said he is proposing significant reform of the Relevant Contracts Withholding Tax regime, which applies to contractors in the construction, meat-processing and forestry sectors of the economy.
To foster compliance, Mr Lenihan said, a new withholding rate of 20% will apply to subcontractors registered for a tax who have an established compliance record, with the existing 35% retained for subcontractors not registered for tax.
He said the system will be strengthened to enhance its effectiveness and reduce opportunities for fraud.
Meanwhile, Mr Lenihan said the recent cold weather conditions once again demonstrated the benefit of ensuring that homes were as energy efficient as possible.
He said he plans to introduce a new tax incentive in this area, which will support employment while improving energy efficiency in homes.
Mr Lenihan said the new incentive will complement the grant aid that is available through the House Energy Savings Scheme currently available from the Sustainable Energy Authority of Ireland.
He said the standard rate tax relief will be available on expenditure up to €10,000 on a list of approved works.
The total relief available under the scheme in any one tax year will be €30m, which would allow for remedial works to be carried out on a minimum of 15,000 homes.
He concluded contractors employed to complete the work must be registered with the Revenue Commissioners.
