Coronavirus UPDATE: Extension of temporary wage subsidy scheme to feature in July Stimulus Package

A measure to encourage people to spend money in the hospitality sector is to be included in a stimulus package to be announced by Government today.

The Stay and Spend scheme will allow people to spend up to €625 in hotels between October and April.

The tax credit will be worth a maximum of €125 per person.

Eligible facilities would have to be registered with Fáilte Ireland, and the incentive would not cover alcohol.

The estimated cost of the incentive is €250 million over this period.

First time home buyers are to receive assistance to stimulate demand.

The current limit of 5% or €20,000 to qualify is being increased to 10% or €30,000.

This measure has been costed at between €18m and €20m.

The measures also include a 2% cut in the standard VAT rate from 23% to 21% for a six month period.

Today’s package of €5 billion in stimulus measures does not include the €2 billion credit guarantee scheme. previously announced by the Government.

Earlier, Tánaiste Leo Varadkar confirmed on his way into a Cabinet meeting – where the plan is being finalised – that the coalition intends to enhance the business restart grant.

At present, it ranges between €200 and €10,000 but it will be increased considerably and made available to more businesses.

Only firms with fewer than 50 employees qualify right now but this criteria will be expanded to bigger businesses with up to 250 employees and to others who did not qualify as they did not pay rates.

Mr Varadkar also said that the stimulus package is as great, if not greater, than most budgets.

Much of it has already been flagged but there will be some other unexpected measures around taxation and increases in capital spending.

Regarding a measure to encourage people to spend money in the hospitality sector, the Minister for Enterprise said it was designed to encourage people who are already saving large amounts of money to spend it at a time when it would be of great benefit to the sector.

Low-cost loans and an extension of the Temporary Wage Subsidy Scheme are among the measures also expected to be included in the stimulus package.

Further low-cost loans beyond the already announced €2bn Credit Guarantee Scheme are also likely to feature in the plan to help firms plan for the future.

An additional waiver of commercial rates, possibly for up to a further six months, is also set to be included in the stimulus.

Additional measures around loss relief for corporation tax are also thought to be under discussion.

Also on the table has been targeted investments in the life sciences sector, which is performing strongly, as well as an export guarantee scheme.

The stimulus will also include policies to promote balanced regional development and will emphasise the importance of attracting and sustaining Foreign Direct Investment.

The rise of remote working will also be exploited and the investment in the National Broadband Plan will be used to make the most of this potential.

The Pandemic Unemployment Payment (PUP), currently being claimed by 313,000 people, has been extended until April as part of the Government’s July stimulus package.

A major retraining and upskilling programme aimed at helping those who have lost their jobs due to Covid-19 is also likely to be contained in the plan, which in total is expected to be worth more than €5 billion.

Promised in the Programme for Government agreed last month, the aim of the July stimulus is to save jobs, create new ones and get people back to work.

The plan was considered by the Cabinet economic sub-committee earlier this week and the full Cabinet is currently finalising the package ahead of its launch later.

It is expected to include an extension of the Temporary Wage Subsidy Scheme beyond the current end date of 31 August and possibly until next spring, in order to give additional certainty to employer and workers.

The scheme, currently supporting the wages of more than 400,000 workers in 68,000 firms, might be renamed.

The eligibility criteria for the scheme, which has cost €2bn to date, is also likely to be widened to assist more firms in difficulty and account for seasonal workers.

The changes may also allow the scheme to be used for staff who were not already on the payroll prior to the pandemic in February.

The July stimulus will be followed in October by a national economic plan that will accompany Budget 2021.