A GROWING black economy in the Republic’s building industry is costing taxpayers about €2 billion a year, according to the Construction Industry Federation (CIF).

The federation published its pre-budget submission to Minister for Finance Michael Noonan at the weekend. It is calling on the Government to tackle the black economy in construction. It says the problem is most evident in areas such as “once-off” housebuilding, home repair and maintenance, and commercial contracting.

The document says “determined action” is needed to tackle the issue. “The CIF recommends the establishment of a working group, comprising the Department of Finance, Department of Social Protection, the Revenue Commissioners and industry representatives, to prepare a memorandum for Government setting out the options available to address this problem,” it says.

The federation’s director general, Tom Parlon, argued that the budget had to support labour-intensive, low-import activities in the Irish economy.

The body, which represents the Republic’s building industry, wants the Government to invest an extra €2 billion a year between 2011 and 2014 in the public capital programme, spending the money on projects focused on education, health, energy, water services and digital communications.

It is also seeking measures aimed at reviving the ailing property market. These include the abolition of stamp duty on commercial deals, including development land, to boost the State’s attractiveness relative to near neighbours such as Britain.

The federation wants the budget to include initiatives to boost house sales and unlock about €116 million worth of VAT tied up in unsold homes.

Mr Parlon warned that the State needed a viable construction sector to aid economic growth.