Dáil debates

Thursday, 26 November 2020

Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Covid-19 Pandemic Supports

10:50 am

Photo of Denis NaughtenDenis Naughten (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

63. To ask the Minister for Finance the expected cost to the Exchequer of the stay-and-spend scheme in 2021 and 2022; and if he will make a statement on the matter. [38837/20]

Photo of Denis NaughtenDenis Naughten (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

The Department of Finance expected people to spend over €7 million per day on the stay-and-spend scheme. We now find that people are spending just €1 million per month. I want the €100 million underspend to date on the scheme to be used to underwrite a gift voucher guarantee for the tourism and hospitality sector. I hope the Minister will look positively on this proposal.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The stay-and-spend scheme provides tax relief by means of a tax credit at the rate of 20% on qualifying expenditure of up to €625 per person, or €1,250 for a jointly assessed couple. It opened on 1 October 2020 and is scheduled to run until 30 April 2021. The tax credit is worth a maximum of €125, or €250 for a jointly assessed couple. The purpose of stay-and-spend is to provide targeted support to businesses within the hospitality sector whose operations are likely to be most affected by continued restrictions.

As it is a demand-led scheme, it is difficult to forecast its cost to the Exchequer in 2021 and 2022. When it was announced in late July, it was estimated that the scheme would involve an Exchequer cost of up to or approximately €270 million. This was an outside estimate based on 2.15 million individual taxpayers availing of the tax credit. In addition, as I indicated at the time, the measure was introduced in anticipation that the economy would be on the way to being fully open and there would be mobility across the country. A number of weeks after we announced the scheme, that all changed. The scheme is due to operate until April of next year, but the flexibility exists for me to extend its operation next year beyond that date. As for uptake and the eventual cost across next year and the year after, a lot will depend on how matters unfold in the weeks and months ahead. As at 18 November, the Revenue Commissioners advise that total qualifying expenditure recorded on receipts uploaded was €2.2 million, with total tax credit of €440,000 due to taxpayers.

Photo of Denis NaughtenDenis Naughten (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

The objective behind the stay-and-spend scheme was to tap into pent-up savings in order to save jobs in the tourism and hospitality sector. The Government, as the Minister says, has set aside €140 million for the stay-and-spend scheme up to 31 December. As a result of the lockdown, that will not happen. Rather than losing this money for the sector, however, I ask the Minister to ring-fence the €100 million underspend to date and to use it to act as a guarantee for those who purchase gift vouchers in the hospitality sector between now and Christmas. We have seen iconic attractions such as Dublin Zoo under threat of closure. This will make many people wary of purchasing gift vouchers for hotels, restaurants and tourist attractions as they fear they may not reopen. However, the purchase of gift vouchers would provide vital cash flow to those businesses, ensure they remain open next year and, importantly, encourage people to holiday at home in 2021. I therefore urge the Minister to consider this proposal.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I remind the Deputy that, unfortunately, much of the money to which he refers is money that we are borrowing, so if the stay-and-spend scheme ends up costing far less than I expect, much of that will be due to reasons that are beyond my control. This means, in effect, that we are borrowing less and adding further debt onto this generation and generations to come. The scheme's underperformance, for reasons the House will be aware of, is one of the reasons I decided to introduce the lower VAT rate on the hospitality and service sector, along with precisely the reasons Deputy Naughten has identified. I recognise the work the Deputy is doing in promoting and advocating for the interests of tourism in the midlands, which I know is important to him.

The extension of the scheme to include vouchers is something I have considered but there is a significant amount of complexity and difficulty involved in doing that. It is something I will keep under review, but much of what the Deputy is referring to will now be advanced by the lower VAT rate.

11:00 am

Photo of Denis NaughtenDenis Naughten (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

I welcome the fact that the Minister is considering extending the scheme beyond April. That is positive news. However, the reality is that it is far better to borrow money to protect jobs in the tourism and hospitality than to borrow money to pay social welfare. I ask the Minister to again look at this issue urgently.

Employers have the option of giving staff tax-free vouchers worth up to €500 at the end of the year as a bonus. As a once-off measure, will the Minister consider increasing that limit to €750 on the condition that the vouchers are for local shops to encourage people to support local business this Christmas? It would help recognise the work done by many staff during a very difficult year with the pandemic and also, more important, it would help to protect the viability of many local businesses across the country.

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is another constructive suggestion from the Deputy. We evaluated what opportunities there were for supporting local spend and supporting activity in local shops which, as the Deputy stated, have had a very, very difficult year this year. It was in recognition of the challenges retailers faced that the Government in the July jobs plan lowered the standard rate of VAT. As the Deputy will be aware, that was aimed at trying to give small and medium-sized retailers additional profitability and additional support if needed to continue to have the chance to stay open or reopen and keep on their current employees. The reason I ultimately did not go with the additional tax support for the voucher to which the Deputy referred is that I cannot make that conditional on the voucher being spent in Irish-owned retail businesses below a certain scale. If one brings in a voucher such as that, it would be for use in all retailers, regardless of how they are owned. As such, there is every possibility that a significant amount of the money would then not be used in the way for which the Deputy is advocating.