Dáil debates

Wednesday, 29 July 2020

Financial Provisions (Covid-19) (No. 2) Bill 2020: Second Stage


10:10 am

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Social Democrats) | Oireachtas source

I welcome the opportunity to speak on the Bill.

It provides for expenditure of in excess of €5 billion as well as some €2 billion in loan guarantees, and comprises 50 measures. It is very much a mixed bag. A number of elements of the plan are to be welcomed but I would seriously question a number of others. I welcome the support for the sectors that have been most impacted by Covid-19, particularly the hospitality industry, which has undoubtedly taken a huge hit during what is normally its very profitable season. The implications of that for many workers are enormous, not just for those employed in the sector itself but also for all of the spin-off jobs that come with a thriving tourism industry and hospitality sector. Even as things are opening up at the moment, from a Dublin perspective things are incredibly slow in the city centre. It is welcome that there has been some improvement in activity levels in local facilities, bars, restaurants and so on but certainly in the city centre, things are desperately slow and it will take quite a bit of time before they pick up again.

I welcome the support for employers and employees who have been struggling as a result of this virus, particularly our SMEs, which are so important to the domestic economy. It was interesting to look at the tax figures that were released a couple of weeks ago. The multinational sector and particularly the tech and pharmaceutical sectors have actually been doing well in the context of the virus. Many of those high-paying jobs are continuing to return significant amounts in income tax, whatever about corporation tax. Income tax receipts were relatively healthy considering what the country has come through in recent months. Clearly the SME sector and our own domestic economy have taken the brunt of the impact of the pandemic. For that and many other reasons which we have been talking about for some time, it is really important that there is some equivalence in terms of attention and supports for domestic SMEs relative to the enormous support and attention paid to the multinational sector.

It is crucial to ensure that the supports being put in place for domestic businesses and the hardest-hit sectors get money into the pockets of those who most need it effectively and efficiently. That is not necessarily the case in respect of the various measures. It should be the predominant, driving objective in this regard but I question a number of the decisions that have been taken. The employment wage support scheme is the strongest pillar of the July stimulus. It is good to see the temporary wage subsidy scheme converted into a longer-term plan. It makes absolute sense. If we can support workers with significant subsidy in their pay but also target funding to the recruitment and retention of employees in the companies affected, the scheme is the most sustainable way of doing this. It certainly gives significant support to employers.

Unemployment has a serious impact on people's self-worth and mental health and causes diminished quality of life. That is why it is so critical to ensure that people are facilitated in remaining connected to their original jobs, if possible, and to the workforce. For that reason, one must question the controversy in recent days over the Government's action in respect of the pandemic unemployment payment, PUP. To a large extent, that works against the objective of keeping people connected to their original job or company. A scheme supporting income keeps people employed, skilled and earning, which is a critical step in the direction of a more humane, person-centred economy. I would welcome a long-term version of this scheme which would provide a permanent buffer between a business being a success and unemployment for workers. Consideration should be given to the German example, for instance. I hope the Minister will look at that in the longer term.

I refer to the area of debt warehousing and reduced interest rates on tax debts. There is no point in placing further undue hardship on a business which has been severely negatively impacted in these rare circumstances. These are not normal times and they do not call for the normal approach to tax debts. I support the measures proposed under debt warehousing and reduced interest rates for tax debts to alleviate the pressure that some businesses are now under as a direct result of Covid-19. The hospitality industry and especially accommodation and food businesses which are targeted by this scheme have been among the worst impacted in this crisis.

The "stay and spend" proposal is a targeted, sector-specific measure and therefore is a better approach than the general VAT cut also provided for in the Bill. However, there are still serious issues from an economic perspective. The tax credit is structured in a way that rewards people who can spend more over those who can only spend a little or cannot spend at all. It is inherently unequal. It is not clear why this scheme is set up as a tax break rather than a voucher system when we know one third of the population will not benefit at all from a tax-back scheme. A voucher to the same value as the tax-back scheme, €125, could have been provided to every eligible person. That would have allowed far greater uptake by lower-income households while still preserving the same benefit for higher-income households. It would have been much more equal and fair. There is a further need to ensure that submitting receipts is easy and straightforward. It seems to be an extremely complicated and difficult system from a compliance perspective but also from the point of view of people who avail of it. Of course, they will not get any tax back for over a year. Accommodation must be registered with Fáilte Ireland to qualify for the scheme. I urge the Government to ensure there is clear information about registered accommodation for the public in order that they can easily follow the rules of the scheme. Overall, it does not seem to make any sense to do it this way. The Minister has not explained why he has taken this approach. A voucher scheme would be much fairer. It could be introduced straight away, which is when the hospitality and tourism industry needs the boost. We are talking about a July stimulus but it is actually a September stimulus to a large extent. The scheme excludes most pensioners, who are not paying tax, as well as people on welfare payments, disability allowance, and the one third of workers who do not pay tax. A large number of people are excluded from the scheme. It does not make any sense whatsoever. When he is responding, the Minister might just explain the thinking. I do not understand it. There was an opportunity to ensure there would be a fair system that would apply to everybody equally, would not advantage high earners over everybody else and that would provide an immediate fillip and stimulus to the hospitality and tourism industry. The way it has been done is deeply unfair and far less effective than it might have been.

How much time do I have left?


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