Mr. Paul Kelly:

I thank Deputy Michael Collins. We will try to move through those questions as quickly as possible.

On his comments with regard to the VAT rate, the tourism recovery task force has recommended that a 5% VAT rate be introduced between now and December 2021 to help the tourism industry to recover and operate competitively. Currently, the VAT rate of 13.5% places us well above the European Union average VAT rate on tourism businesses, which is between 10% and 11%.

It is our understanding from the advice we have received that the 0% VAT rate is not legally possible. It cannot come within the remit of the Irish Government to get a zero VAT rate due to European Union VAT regulations. Our advice is that 5% is the lowest the Irish Government can go under current European Union legislation, and that is what we recommend.

The Deputy asked about the three specific schemes. The first is to help businesses cover costs incurred while closed. As I indicated in my opening comments, our estimate is that businesses have lost over €1 billion due to costs incurred while closed. This varies to a large degree depending on the type of business involved. Costs like insurance, information technology, maintenance and security continued to be incurred so although the Government had fantastic supports in the form of the temporary wage subsidy scheme and the pandemic unemployment payment in tandem with the VAT holiday and loan repayment breaks from financial institutions, which have also helped businesses, there have been many other costs. The first scheme is to help those businesses. We have done an analysis of the costs by different scales of businesses in different sectors and we have developed a grant scheme proposal that has been endorsed by the tourism recovery task force. Like ourselves and everyone in tourism, we are hoping these will be approved in the July stimulus package.

The second grant scheme is to help costs around the adaptation of businesses arising from having to operate in a world with Covid-19. These relate to increased costs associated with cleaning equipment, signage and personal protective equipment. We have seen a range of costs from €20,000 to €50,000 to adapt businesses. We will not be able to support all those costs but it would be exceptionally welcome to make some contribution to those.

The third scheme we have included is a proposal for a working capital scheme. Unfortunately, despite all the hard work and great schemes out there, the drawing down on those Government-backed schemes is still very low. From the tourism industry, one would measure the drawing down on the State-backed schemes in the tens of millions of euro. In the context of €1 billion of costs incurred while businesses are closed, this is a mere drop in the ocean.

We have analysed each of those schemes, working with colleagues in our Department and the Department of Business, Enterprise and Innovation, as well as the Strategic Banking Corporation of Ireland etc. We have examined the schemes and understand the gaps and issues. It will take time for tourism and business to recover and the working capital schemes required by tourism businesses must have low interest rates and long repayment terms. They need to be as close to 100% of a State-backed guarantee as possible. It is the proposal we have made. Once again, we hope the funding can be covered as part of the July stimulus package. It will be required to help those businesses get up and running so that people can be brought to areas in Ireland again.

Perhaps I will hand over to my colleague to speak-----