Madam, – As the economic crisis in this country deepens and unemployment levels climb, there is inevitable growth in the black economy, which tends to mushroom in all recessions. This was a particular problem in this country in the 1980s. At that time, the government introduced an innovative scheme, called the residence related employment scheme (RRES).
This scheme was in response to the expanding black economy and aimed to increase high-labour-content employment and safeguard tax revenues by incentivising householders to employ tax-compliant building and landscaping contractors. Its positive effects for the economy were that it gave a boost to small contractors and the self-employed allied to the building industry; householders were able to benefit by availing of a special tax break for employing tax-compliant contractors to carry out improvements on their homes and gardens; the Exchequer benefited from VAT and PAYE returns, which in the black economy do not accrue to the State.
The time has now come for this scheme to be introduced again. The Government has been criticised for its employment stimulus measures. Here is a scheme that supports entirely home-grown labour and materials (in contrast to, for example, the car scrappage scheme now in operation to help the Irish motor industry which produces not one car in this country).
A new, properly constituted RRES could release some of the large savings held on deposit back into the economy, could guard against further tax leakage and could help to safeguard employment in the beleaguered small building sector, of which we are part. – Yours, etc,