Taxpayers’ take-up of the Government’s ‘stay and spend’ scheme to encourage people to support the hospitality sector has been tiny compared with original projections.
The purpose of the initiative was to encourage domestic demand in the hospitality sector by giving tax breaks to people for dining in restaurants and staying in hotels and other accommodation. A total of €125 could be claimed as a tax credit for an individual, or €250 for a couple.
When it was announced in late July, Minister for Finance Paschal Donohoe estimated the scheme would cost the exchequer about €270 million, based on more than €1 billion of spending.
However, soon after the scheme’s commencement date the State was subject to a series of lockdowns, including a six-week Level 5 lockdown between late October and early December.
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Take-up is now estimated at about 0.2 per cent of original projections. The latest figures for the uptake of the scheme show that, as of November 19th, the total expenditure recorded on receipts uploaded was €2.2 million, with total tax credit of €440,000 due to taxpayers.
The scheme is due to end in April 2021, but with further Level 5 restrictions likely for much of the first two months of next year, it is certain the final take-up of the scheme will be only a small fraction of what was envisaged.
Voucher scheme
Independent TD Denis Naughten, who highlighted the low take-up through a series of Dáil questions, has called for the tax credit to be replaced by a straight voucher scheme to be used by Irish citizens once restrictions have been lifted.
He said such a scheme would be far more beneficial than the tax credit scheme, under which people have to wait until the following year for their refund.
In the Dáil before Christmas, Mr Naughten also called on Mr Donohoe to earmark the unspent money for another stimulus programme.
The Minister’s spokeswoman said while the scheme is due to end on April 30th next, he does have flexibility to extend it beyond that date.
In his Dáil reply to Mr Naughten, Mr Donohoe said: “We need to keep policies that are working, and change ones that might not be working as planned, but at all times ensuring they are affordable.
“However, to the extent that spending on the scheme may be less than the original cost estimate, this of course means that we need to borrow less and accumulate less debt.”
Mr Naughten said he wanted the €100 million underspent to date to be used to underwrite a gift voucher scheme. “There would be a huge economic dividend if people holidayed at home in 2021 as well as protecting jobs,” he said yesterday.
The scheme began in October and the €270 million outside estimate was based on 2.15 million individual taxpayers availing of the tax credit.
Mr Donohoe told the Dáil the measure was introduced in anticipation of the economy being on the way to full reopening with mobility across the country.
“A number of weeks after we announced the scheme, that all changed. The scheme is due to operate until April of next year, but the flexibility exists for me to extend its operation next year beyond that date,” he said.
A spokesman for Minister for Tourism Catherine Martin said she has already stated her view that the scheme may have to be reviewed, in light of the stop-and-start nature of pandemic restrictions.
“Given the ongoing disruption for the hospitality and tourism sector, the Minister intends to have a conversation with her counterpart, finance Minister Paschal Donohoe, in the new year about the scheme and whether it should be reviewed or extended,” he said.
