State will spend €41bn on pandemic supports, report finds

The State will end up spending €41 billion on pandemic supports, according to a paper from the Tax Strategy Group.

The paper also says future changes to the Employment Wage Subsidy Scheme (EWSS) will require an employer to make a contribution to employee wages.

The Tax Strategy Group (TSG) is made up of civil servants from several government departments that examine the options around taxes as part of the planning for the Budget. The papers were published today.

The paper also says that although the EWSS scheme is due to expire at the end of this year, its continuation in some form into next year ‘cannot be ruled out.’

The paper details how up until the end of August, 51,200 employers and 645,700 employees have benefitted from the scheme which has cost €4.5 billion to date.

The number of jobs supported by the EWSS was 277,700 in August, down from 343,500 in July.

Based on an analysis in June, 31% of employees in the Accommodation and Food sector were supported by EWSS and 13% of those employed in retail.

The paper also reveals that by the end of August under the Stay and Spend scheme, 67,529 receipts have been uploaded to the Revenue Receipts Tracker.

This represents €11.2 million of expenditure and potentially €2.3 million in tax rebates.

However, the paper notes that public health restrictions prevented the scheme from working as originally intended.

It says there are no plans to reintroduce the scheme.

The paper also discusses the reduced 9% VAT rate for the hospitality sector.

It estimates that its extension till the end of the summer season next year will cost the Exchequer €350 million.

It notes there is expected to be a recovery in the sector and that often the reduced VAT rate is not passed on to consumers.

Under these circumstances, it concludes “…further extension of the second reduced rate for the hospitality and tourism sectors may not be the most appropriate use of Exchequer funds.”

It says that when the measures under the Economic Recovery Plan are taken into account, the State will have spend €41 billion on pandemic supports with the PUP and EWSS accounting for the bulk of this expenditure.