The Minister for Finance should use next week's Budget to abolish stamp duty for first-time house buyers as well as doubling mortgage interest relief, a leading economist has urged.
Friends First chief economist Jim Power said the measures were required to ease the plight of first-time buyers.
Jim Power, Friends First
He was speaking on the publication of the Friends First Quarterly Economic Bulletin today, which also proposes a 2 per cent cut in the top rate of tax in order to stimulate further economic growth.
"Lower taxes have been instrumental in the success of the Irish economy and it would be a missed opportunity if the chance to take the rate down by 2 per cent were passed up for misguided ideological reasons," Mr Power said.
"The Minister for Finance has scope to increase current spending by up to 8 per cent and introduce some meaningful reform on the taxation front in his forthcoming budget."
Mr Power said the economic and fiscal background against which Brian Cowen will present this year's Budget had "never been more favourable.
"It is incumbent on Mr Cowen to use the finite resources at his disposal wisely and make a real difference to people's lives and the efficiency of the economy. If the Minister for Finance exercises sound judgement on December 6th then this Government has a golden opportunity to make a real impact on shaping the social and economic fabric of Irish society into the next decade."
He said that instead of "focusing on returning Fianna Fáil to Government in the summer, the Budget should focus on sustaining economic growth and stability, among other issues.
The focus should also be on providing a stable background for the housing market, while helping "struggling first-time buyers". It should also maximise the creation of sustainable and higher-quality employment and improve damaged economic competitiveness, with particular focus on the manufacturing sector.
Mr Power also said the Minister should seek to improve the quality of life of the most disadvantaged in Irish society.
"Over the past decade considerable wealth has been created in the Irish economy, and prosperity has improved for most people. However, while people may be better off, there is a general feeling of dissatisfaction, particularly in our urban centres where public services and the public infrastructure are pressurised and in need of further investment. These issues must receive special attention in Minister Cowen's forthcoming budget."
Growth next year will be dependent on further stimulating consumer spending and ongoing growth in the construction sector, Mr Power said.
The Friends First Quarterly Economic Outlook predicts GDP growth next year of 4.9 per cent and GNP growth of 4.8 per cent.