Budget 2021 included reduced VAT rates, a new Covid-19 support scheme, a €3.4bn recovery fund and an extension to the Employment Wage Subsidy Scheme.
The Government unveiled Budget 2021 today (13 October), with measures and plans largely shaped by the ongoing Covid-19 situation.
In light of the unprecedented impact that the pandemic has had on business, the economy and employment in Ireland, as well as the continued uncertainty of Brexit, this year’s Budget is worth more than €17bn.
Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar, TD, described it as a “pro-business and pro-jobs Budget”.
He said that the Budget prioritises investment to help businesses respond to the twin crises of Brexit and Covid-19. The funding provided comes on top of the measures announced earlier this year in the €7bn July stimulus package.
One of the headline measures is that the VAT rate for the tourism and hospitality sector will drop from 13.5pc to 9pc from 1 November 2020. Varadkar said that this will help hotels, pubs, restaurants and other businesses in the entertainment, tourism and hospitality sectors to recover.
The Government has also introduced a new Covid-19 Restrictions Support Scheme (CRSS), which will offer a targeted and temporary sector-specific support to businesses forced to close or trade at significantly reduced levels as a result of Covid-19 restrictions.
There will also be a €3.4bn Recovery Fund aimed at protecting jobs, and the Employment Wage Subsidy Scheme will be extended into 2021 if required. Illness benefit will now be available on day three of an illness, rather than on day six. The Government also announced an extension of the commercial rates holiday, which will reduce costs for businesses.
In addition, the Government announced plans to spend €10.1bn on infrastructure in 2021 to ensure there is work for the construction sector. This initiative also aims to deliver homes, schools and public transport.
Responding to Brexit and Covid-19
To help businesses adapt to Brexit, the Government has announced the following measures:
- €8m to undertake new market surveillance and certification, required even if a Free Trade Agreement is in place
- €15m to support businesses as they respond to changes to customs and tariffs
- €7m to help the food processing industry adapt to Brexit
- €11m for Local Enterprise Offices working with local businesses across the country
- €675,000 for InterTrade Ireland to provide practical help to businesses trading cross-border
In response to the pandemic, the Government announced:
- €39m in continued access to low-cost loans for businesses
- €30m for applied research in the pharmaceutical and healthcare industry
- €10m to help businesses move online with the Online Retail Scheme
The Government also announced a number of recovery-focused investments, including:
- €10m for IDA Ireland to develop advanced factories and industrial estates for companies seeking to invest in Ireland, especially outside of Dublin
- €30m ring-fenced for a call to regional enterprise centres for initiatives to create jobs in every region of the country
- €6.6m for an advanced manufacturing centre in Limerick, providing a state-of-the-art facility for companies across the country to develop new technologies
- €3m for a network of digital hubs to help SMEs modernise and stay connected
In addition to these measures, Minister for Finance Paschal Donohoe, TD, said that there will be no changes to the income tax credits or tax bands.
With the shift to remote working for many, the working from home allowance will remain at €3.20 per day. Remote workers can now also include the cost of broadband in their applications for rebates, as well as heating and electricity costs.
For more information on wage supports, taxes and investments in education, check out our other Budget 2o21 coverage here.