THERE has been strong reaction to the ESRI report urging the Government to consider a temporary tax on mortgages and its suggestion that the pound could join EMU at its current ERM rate of 2.41 deutschsmarks.

A spokesman for the Minister for Finance, Mr Quinn, said it was wrong to give the impression that there was agreement on existing central rates being used to determine the value at which the pound would enter EMU.

He said Mr Quinn had made it clear "on a number of occasions" that the issue of conversion rates for EMU would not be determined until much later in the process and that it had not even been discussed by Ecofin ministers.

Meanwhile, house builders have reacted angrily to the ESRI suggestion that the Government should consider introducing a temporary tax on new mortgages to curb rising property prices.

The Irish Home Builders' Association (IHBA) said the suggestion amounted to nothing more than a tax on home ownership and strongly questioned its "effectiveness and implication".

The IHBA argued that house prices would continue to be driven by demand and supply factors and that it had been calling on the Government and local authorities for years to address the building land supply shortage.

"They must face reality and deal with the acute shortage of suitably zoned and serviced housebuilding land," it said.

"It is inevitable that upward pressure on house prices will continue as long as demand for new houses exceeds supply," it added.

The IHBA also argued that house building has played a major role in the improved performance of the economy.

"Direct employment in house building currently amounts to 42,000 with another 15,000 employed in support industries," it said.