Dáil debates

Wednesday, 29 July 2020

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

 

4:35 pm

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

I welcome this Bill but I have some deep reservations about it. They are quite technical and I hope the Minister can take them on board. There is a pattern in rural areas, particularly along the west coast, of tourism businesses opening from St. Patrick's Day, or around March or Easter, and closing around Hallowe'en or near Christmas. Many of them are not open in January and February every year. That is crucial because, as a consequence, they were not eligible under the TWSS. I welcome the effort to address this through the introduction of the EWSS. Many of these businesses, such as hotels and so on, did not open at all in the first half of this year and so their turnover for that period was down by 100%. If the staycation incentive works, their income in the second half of the year might be quite good and might be over the 70% threshold. According to the Bill as drafted, these businesses, which were not entitled to the TWSS because they were not trading in January and February, will also not be entitled to the EWSS if their turnover in the second half of the year is over 70%, despite the fact that the gross turnover might only be 40% of their 2019 turnover. Businesses that were trading in January and February and continued trading throughout the year at a capacity of just under 70% would be entitled to both schemes. I suggest a very simple change, which is that the 1 July date is put back to 1 January. If a business' turnover for the year is down by 30%, it should be entitled to the scheme. Otherwise, there will be a double-whammy for seasonal tourist businesses, which will put many of them out of business.

I am always worried about the second iteration of a scheme because sometimes when people get at it, they add more and more conditions. When I looked at the small print, I noticed that, for some reason, proprietary directors are now excluded from the EWSS scheme. Ireland is full of very small self-employed businesses, some of which are formed into small companies, and the proprietary directors can sometimes comprise between 40% and 70% of the workforce. These proprietary directors are ordinary workers in the business as well. This Bill proposes to allow them to write off last year's tax, take a credit or average it over two years, but that is not going to solve these people's problems because while some of these companies will be making a profit, the actual profits will be very small once they have paid themselves a salary. Some of them will have a small turnover. I know of one company in the crystal business, for example. As there will no foreign tourists this year and its product is not as big a seller on the local market for the staycation business, it will hold onto its master craftspeople for the full year and will produce products that, please God, it will be able to sell next year if its bookings hold up and we get international tourists. Its other choice is to let its master workers, who in some cases have been there for up to 40 years, go. The Minister knows the consequence of that. Losing that kind of expertise would decimate a small business. I hope that even at this late stage the Minister might be able to look at the exclusion and take it out of the Bill, at least for very small companies. It would make a significant difference if he did so.

I refer to the staycation or stay and spend tax credit. I listened to the debate on this matter and I can understand the attraction from an administrative point of view because it is a good fix given how many taxpayers there are. However, I join those who said it removes a very important segment of people from the market, namely, those who do not have a taxable income or do not pay income tax.

As the Minister is aware, there is a tax exemption for people over the age of 65. Couples with an annual income of less than €36,000 and single persons with an annual income of €18,000 do not pay tax. Many of those people, however, have paid for their houses, have a little bit of money in the bank and have some to spend. If anyone doubts that, I suggest that the Minister talk to his good colleague, Deputy Ring, who lives in Westport. That is a town that stays open throughout the winter every year, specialising in a market built around the railway station. People over the age of 65 get free travel to Westport, where they stay in good hotels at good rates. That has created great life in the town.

This scheme will not attract pensioners such as these because there is nothing in it for them. There has only ever been one scheme with a reversible tax credit. I was trying to recall which one it was. People who had no tax to pay could get the value of the credit back from the Revenue. It was a simple enough mechanism. Revenue has the bank details of nearly everybody and it is very good at making tax refunds. If someone sends in a tax return to the Revenue and has slightly overpaid because of health expenditure, etc., the Revenue will always repay the overpayment. It is efficient and not overly bureaucratic.

It would be a major boost to this scheme if the Minister included such a process and made a rebate available. Even people with no income tax liability, therefore, could get the value of the tax credit paid into their bank accounts. There is a major market for the very people the Minister is trying to get to spend money, namely, savers with money in the bank and people with no debts. We must remember that those over the age of 65 account for a large proportion of the people with the ready cash needed by businesses in many towns. Westport and other towns in the west will make themselves safe regarding Covid-19. They will organise in a safe way and the same has to be said for Iarnród Éireann. For this reason, the change I propose could be introduced.

These are practical measures that could be taken that would address the little gremlins that get into schemes. To summarise, I ask that the 1 July date be brought back, as otherwise the scheme will be totally lopsided against seasonal businesses, which will, please God, do relatively better in the second half of the year, having had no business until the end of June. The second point is in respect of the proprietary directors and the third concerns making it even better for staycations by allowing all people registered with the Revenue in on the gig.

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