Government considering VAT cut for hospitality sector

Government considering VAT cut for hospitality sector

Michael McGrath TD, Minister for Public Expenditure and Reform. "It is not the time to withdraw supports for businesses, jobs, and the economy." Picture: Moya Nolan

There will be no reductions in income tax in next week’s budget as they are not part of Finance Minister Paschal Donohue's thinking at this time.

Confirming that personal tax rates will remain unchanged, Public Expenditure Minister Michael McGrathhas not ruled out a reduction in the VAT rate for the hospitality sector.

We are all weary and many people have paid a severe economic price during the pandemic but we need to get on top of this

Speaking on Sunday about the likely assistance for the sector and the likelihood of a reduction of the VAT rate from 13.5% to 9%, Mr McGrath said: "The full range of options across the taxation code is being considered. At this point in time, nothing has been ruled out before the Budget is finalised on October 13”.

"We would have to assess the economic impact [of cutting the VAT rate], the amount of tax foregone, how effective it would be as a stimulus, and if it would help businesses be more viable."

He said the current rise in coronavirus cases was "not sustainable" adding: "We are all weary and many people have paid a severe economic price during the pandemic but we need to get on top of this. We need to ask ourselves what more can we do to adhere to public health advice. But it is tough and difficult."

In an interview with the Irish Examiner, Mr McGrath said austerity was not being considered for this year's Budget. "It is not the time to withdraw supports for businesses, jobs, and the economy."
Meanwhile, Irish Universities say they need a €538m funding package to cope with the impact of Covid-19 and to develop research.

Universities are seeking a sustained investment programme. Picture: Denis Minihane.
Universities are seeking a sustained investment programme. Picture: Denis Minihane.

In its Budget 2021 submission to the Government, the Irish Universities Association (IUA) says it is seeking a sustained investment programme to enable colleges to deal with the financial challenges of Covid and to address key national priorities including skills and talent development, research & innovation and green capital investment.

“The overall investment package required for the sector is €538 million of which €318 million is recurrent spending and €220 million in capital expenditure,” the submission states.

The constituent parts are:

*€102 million for additional and unavoidable Covid-related costs next year.

* €246 million for initiatives designed to boost the national recovery including a Flexi-skills programme and a Green Campus Infrastructure fund.

* €140 million for research and innovation investment to underpin the development of the knowledge economy.

*€50 million to address the core funding deficit.

“Our universities have a pivotal role to play in responding to the pandemic and in contributing to the national recovery,” says Jim Miley, Director-General of the IUA.

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