IN ITS FIRST major policy announcement, the coalition government today announced its July stimulus package.
Although some of the details are yet to be made public, there were few surprises in the measures as they were unveiled this evening.
A headline figure of €7 billion has been attached to the package but this includes the €2 billion credit guarantee scheme announced by the previous government in May.
Stripping that out along with the taxation measures announced — which includes a €10,000 increase in the tax relief available under the help-to-buy scheme — and the commercial rates waiver that will remain in place for the next six months, the total value of new expenditure in the policy bundle is around €3.8 billion.
So what are the headline policies and what do you need to know?
Income and employment support schemes
By far the most impactful measures introduced by the government in the early days of the crisis were the Pandemic Unemployment Payment (PUP) and the Temporary Wage Subsidy Scheme (TWSS).
They have also been the most expensive with the State forking out around €3 billion on the PUP and a further €2 billion on the TWSS, according to the most recent figures.
Today the government announced the extension of these two schemes until next spring with some major alterations.
Overall, it’s estimated that the State will spend a further €2.6 billion on these programmes over the rest of their lifetime representing over 68% of the new expenditure announced today.
From 1 September, the TWSS will be replaced with the Employment Wage Subsidy Scheme, a flat subsidy paid out at different rates although precise details of the various payment bands are yet to be announced.
That scheme will run until 31 March next year.
The PUP has been extended until April next year but will be progressively tapered as more people return to work.
From 17 September, the top rate of payment under the scheme will be reduced from €350 to €300 for people who were earning over €300 per week before the pandemic.
Workers who earned between €200 and €300 pre-Covid will receive €250 and those on less than €200 will now get €203.
Hospitality and consumer support
Although it’s been at the top of the hospitality sector’s wishlist, the government decided against reducing the sectoral rate of VAT.
However, one of the few policy surprises in the package is a temporary decrease in the standard VAT rate from 23% to 21%. That will be in place from September for a period of six months.
One of the most eye-catching measures announced this evening is the ‘stay and spend’ tax rebate for Irish holidaymakers looking to take a ‘staycation’ this year.
It means that individuals can reclaim 20% of their expenditure on hotel stays and meals — but not alcohol — in the form of a tax credit at the end of the year.
The max that you can spend to qualify for the scheme is €625 for individuals but that’s doubled for married couples, meaning that you’ll be able to reclaim €125 or €250 at the end of the year.
That will come into play in October, rather than September as had been reported during the week.
Although the scheme been criticised for failing to incentivise restaurant and hotel visits during the summer months, Taoiseach Micheál Martin said the idea is to try to boost tourism in the lean winter months.
Business restart grants
An extra €300 million is being given to the Department of Business to boost the €250 million restart grant scheme announced by the last government in May.
Previously, grants of up to €10,000 were available to businesses based on what they paid in commercial rates last year.
Now, the upper limit on grants will be increased from €10,000 to €25,000 and the minimum amount available will be €4,000, up from €2,000.
The criteria for applications has also been slightly tinkered with.
Back in May, when the policy was announced, concerns were raised by lobby groups like the Irish Small and Medium Enterprises Association that because the grants were linked to rates, some companies with premises that do not attract a high rates valuation could slip through the cracks.
ISME had called for grants to be decoupled from the rates system. This hasn’t happened.
However, the scheme has been expanded to incorporate companies that employ 250 people or less, up from 50 under the measure’s first iteration.
According to the Department of Business website, “support will also be provided for enterprises that could not access the original grant scheme. Non-rated B&Bs and rateable sports businesses will be eligible for a grant payment of €4,000.”
Apprenticeships and placements
Straight from the playbook of the last recession, the government announced today that an extra €200 million will be made available to the Department of Employment Affairs and the Department of Higher Education to fund work placement and apprenticeship schemes.
Overall, it is hoped that the investment around 47,000 places can be created across several different funded work experience schemes.
A new apprenticeship incentivisation scheme which will provide a €2,000 payment to support employers who take on new apprenticeships this year.
Officials hope to create 8,000 new places under the existing JobsPlus scheme, which gives subsidies between €7,500 to employers who take on long-term unemployed people under the age of 30.
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