Budget 2021 revealed: Music and arts to get funding boost, commercial rates waiver to be extended

Minister for Finance, Paschal Donohoe is set to announce the Budget next week. Picture: Gareth Chaney/Collins

A VAT reduction aimed at bolstering the beleaguered hospitality sector is expected in Tuesday’s budget, senior Government sources have confirmed.

Today, the Irish Examiner can reveal three major details of Budget 2021, to be announced on Tuesday.

It is understood:

• Amid calls from industry for a return to 9% rate introduced during the last crash, a lowering of the VAT rate has "not been ruled out”;
• An extension of the commercial rates waiver up to next April, is also likely;
• The performing arts sector is to receive “tens of millions” of euro in funding for small community venues and large commercial concert spaces.

In relation to a VAT cut, there has been mounting pressure on the government to reduce the current hospitality tax rate from its current rate of 13%, back to the 2018 rate of 9% in order to help salvage the sector, enabling outlets to reduce their prices and coax customers back to the industry.

Sources say there are still "some important negotiations ongoing" ahead of the unveiling of the government's budget for 2021 on Tuesday but a VAT move is seen as likely.

Extending the commercial rates waiver to at least the end of quarter one 2021 is seen as the most likely outcome as a way of helping businesses stay afloat.

The Dáil this week approved the payment of €600m to local authorities to offset the cost of waiving the rates for quarters two and three of this year, with a decision yet to be made on quarter four.

Sources indicate that the waiver could be applied as far as April 1, though there are concerns about the cost of plugging this funding gap for local authorities, which are beginning to face serious deficits due to a collapse in funding and income.

Responding to questions from the Irish Examiner, Public Expenditure Minister Michael McGrath confirmed he is “very concerned” about local authority services because of a drop off in commercial revenues but said he wants to see such services protected.

“We're also looking at any particular needs that they may have in the current year because we are we are concerned about services so we want them protected for the remainder of this year and into next year,” he said.

Tánaiste Leo Varadkar said in the Dáil this week that "that additional funding will be required for local authorities to plug deficits that are arising. It is very much in the mix for the budget".

It can be revealed that grants of up to €10,000 for music and theatre venues will be included in the budget in a programme described as a “lifeline for the industry”.

The scheme is based on a similar scheme which was included in the July stimulus, which saw €5m allocated for venues and performers to receive grants in order to plan for gigs and concerts and cover their costs if the event was cancelled due to Covid-19 restrictions. 

The scheme proved incredibly popular and was oversubscribed by around €10m, garnering three times as many applicants than funding was available for.

“The package will be available for the likes of (live music pubs) Whelan’s, Coughlan’s, the Roisin Dubh and the Gleneagle, from schools and colleges who want to put on a show, wedding bands, drama groups and up to the 3Arena,” a government source said.

The amount of funding granted will be based on criteria such as how many staff the venue or company employ and the track record it has in live music or performance.

In addition to the above measures, ahead of Tuesday's budget, we know that there will be:

• No raises in income tax;
• A rise in the carbon tax;
• The continuation of the Help-to-Buy scheme;
• Funding for 9,000 directly-built homes to begin;
• Up to €9bn of the Budget will go on social welfare, though the Pandemic Unemployment Payment is unlikely to be restored.