How Did The Government Do On The Big Issues In It’s First Budget?

Budget 2021 coverage brought to you in association with Flynn & Lynch Life and Pensions Ltd

Jobs/Unemployment  

The measures: The PUP payments and Employment Wage Subsidy will continue is 2021 with people in receipt of PUP for more than four months entitled to a Christmas bonus. A tax warehousing scheme will help people offset tax bills for receiving supports from both schemes during the pandemic. The EWSS will be extended in some form until the end of 2021 – a similar scheme to that in place now and until March 2021 will be put in place to the end of 2021. The government will decide on the form of this extension when economic conditions are clearer. One of the biggest single expenditures announced in Budget 2021 was the Covid-19 Recovery Fund which will be placed into infrastructure, re-skilling and retraining and the maintenance of jobs throughout 2021.

The verdict: Despite the thousands of jobs to be lost in 2020, this Budget at least gave certainty on measures there to provide support. The choice to not increase staple social welfare payments will draw criticism but the Covid support commitment and rolling recovery fund will at least put some minds at ease.

Business Supports

Targeted supports for the hospitality industry and the arts were announced in Budget 2021. The Covid Restrictions Support Scheme will generally operate when Level 3 or higher restrictions are in place under the Living With Covid-19 Plan. Currently, the accommodation, food, arts, recreation and entertainment industries are eligible with those sectors closed under Level 3. Other sectors will qualify at higher levels of the plan if and when they come into force. People will apply to the Revenue Commissioners for advance credit for the period of restrictions. The scheme is available today until next March. The first payments under the scheme will be made in mid-November. A €55 million fund has been targeted at supporting the tourism sector. The extension of the wage subsidy scheme has also been welcomed across the sector.

The verdict: This support is not insignificant and there is a certain appreciation of that from businesses. There is always room for more but the Covid-19 Recovery Fund of €3.4 billion will undoubtedly provide extra help as it is needed in 2021.

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Tax/Income

The measures: There will be no increase to income tax or USC. The government is to develop a strategy for remote working with interdepartmental work already ongoing on this. Workers are entitled to claim €3.20 in tax rebates per day if their employer makes a contribution towards remote working. Those whose employer does not make a contribution towards remote working can also make a claim for a tax deduction for associated costs. These costs include lighting, heat and now broadband costs. The headline VAT rate has been reduced for the hospitality and tourism sector. It will move to 9% from 13.5% with the change to stay in place from November 1 to the end of December 2021. A commercial rates waiver brought in during the July Stimulus plan is being extended to the end of the year. A €55 million fund has also been announced for the Tourism Business Support Scheme.

The verdict: There may have been a mutiny from workers if their income tax increased, although it may have been justified given the fiscal situation post-Covid. The lack of further supports for workers in terms of childcare and dealing with reduced hours or salary will draw criticism. However, PUP recipients being allowed to earn just less than €500 without losing their payment will be welcomed. 

Transport/Environment

The measures: Carbon tax will increase by €7.50 every year from now until 2029 and then by €6.50 in 2030 to achieve €100 per tonne. This year’s increase will take effect on motor fuels tonight. This is likely to add €1.20 to a fill of petrol and €1.50 to a fill of diesel. Changes have also been announced to VRT charges based on emissions. This measure is aimed at incentivising people to buy low-emission cars. In line with this, a third motor tax band will be introduced from January cover ultra-energy-efficient vehicles. €65 million has been announced for the deep retrofitting of social housing stock. This came alongside a new apprenticeship scheme which will invest in the training of workers to carry out such work throughout the country. 

The verdict: In the broader scheme of things, these motoring measures will take us some way to addressing our climate change emissions targets. The apprenticeship scheme will result in jobs and warmer and more efficient houses too. However, with the added costs for motorists and consumers generally, these measures will not be popular.

Health

The measures: €4 billion will be spent on the health service in 2021. Investment will allow for 100,000 Covid-19 tests per week and will increase bed capacity, an additional 1,146 acute beds; an increase in critical care beds to 321 from 255 pre-Covid-19; 1,250 community beds in 2021 including 600 new rehabilitation beds; as well five million additional home care hours.

The verdict: This is an unprecedented spend on health but will be judged on its implementation rather than its headline amount. The increase in ICU beds does not go far enough and the promise of 100,000 tests per week is still just that – a promise. 

Housing

The measures: Over €5 billion will be spent on housing next year. The Help to buy scheme has been extended until the end of 2021 with a max rebate of €30,000. €500m has been allocated to capital expenditure on housing, supplying 9,500 new social housing units in 2021. An expansion has been announced for HAP tenancies as well as 800 more rental accommodation scheme tenancies. €22m will be spent on homelessness programmes including additional beds; €110m for affordable housing package for affordable and cost rental and €210m under Rebuilding Ireland Home Loan scheme.

The verdict: A huge budget but lacking ambition. The number of social houses to be provided, even when you include those the government will lease, is not enough. Neither is the rate of new builds for affordable housing schemes. A move to include second-hand homes in the Help To Buy scheme would have also been welcomed to reduce the reliance on that new supply. 

Five Things You Might Have Missed In Budget 2021

More Gardaí On The Way

Budget 2021 allows for the recruitment of 620 trainee gardaí through Templemore next year. A further 500 Garda staff from the civilian population will also be recruited to fill administrative and back-office jobs. The number sergeants and inspectors within An Garda Síochana will also increase next year. In addition, the increased capital allocation for An Garda Síochána will see ongoing investment in ICT modernisation within the force.

Money for Met Éireann

Met Éireann is to receive additional capital funding of just over €13 million for existing key projects but also the establishment of a national flood forecasting and warning service; the upgrade and modernisation of the State’s existing weather radar infrastructure; the development, in partnership with 4 other European National Met Services, of a state-of-the-art High Performance Computer platform for Numerical Weather Prediction.

Almost 1,000 More SNAs

The budget provides for 990 additional special needs assistants supporting the full rollout of the new SNA model and bring the total number of SNAs in Ireland to over 18,000. The Budget also provides for 145 additional special education teachers; 258 additional special class and special school teachers; An additional 80 occupational, speech and language and behavioural therapists and 30 NEPS to support the phased roll-out of the School Inclusion Model, aimed at ensuring students with additional needs get the right supports at the right time.

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Tax Break For Gaming

Work will take place in 2021 on the development of a tax credit for the digital gaming sector, with a view to supporting qualifying activity from January 2022 onwards. “Digital gaming is a sector that has seen exponential global growth in the past decade and there are potential synergies to exploit with the established film and animation sectors, to support quality employment in creative and digital arts in Ireland,” Budget 2021 states.

Money Back For Working From Home

You can claim a tax deduction while working from home. Workers are entitled to claim €3.20 in tax rebates per day if their employer makes a contribution towards remote working. Those whose employer does not make a contribution towards remote working can also make a claim for a tax deduction for associated costs. These costs include lighting, heat and now broadband costs. The government is also developing a strategy for remote working with interdepartmental work already ongoing on this.

BUDGET 2021 – AT A GLANCE:

– Budget measures totalling €17.75 billion announced 

– The pension age increase to 67 will not proceed. It will remain at 66

– Headline social welfare rates unchanged 

– €4 billion to be spent on the health service

– No increase to income tax

– €3.4 billion unallocated Covid-19 Recovery Fund to be used as needed by the government next year

– €5 billion to be put into the Department of Housing – focus on social and affordable housing supply

– The price of a packet of cigarettes will increase by €0.50, bringing average pack price over €14

– Wage subsidy scheme will be extended to end of 2021

– People can earn just over €400 in casual work without losing Pandemic Unemployment Payment

– ICU beds to increase from 255 to 321

– Price of petrol and diesel to increase by €1.20 and €1.50 per tank fill respectively 

– Carbon tax will increase by €7.50 per year until 2029 and €6.50 in 2030 to achieve €100 per tonne

– Help To Buy Scheme extended through 2021. Max rebate for deposit of €30,000. 

(Source – Donegal Democrat / Donegal Live – Justin Kelly – 13/10/2020)

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