Tanaiste admits spending incentives currently of little use to hospitality sector
But Leo Varadkar said measures like a VAT cut will help businesses in future, as it will continue until December 2021.
The Tanaiste has admitted incentives for domestic spending will have little impact at the moment because of the current Covid-19 restrictions.
It was announced in Tuesday’s budget that the VAT rate for the hospitality and tourism sector is to be cut from 13% to 9% from November.
But many hospitality businesses have been shuttered or operating at a reduced level because of the restrictions in place across the country.
Leo Varadkar admitted the VAT cut is not much use to the industry at the moment.
It was part of the Government’s 18 billion euro budget to help sustain the economy and society through the coronavirus pandemic.
Budget 2021 is based on the premise that the country’s fight against Covid-19 will last throughout 2021.
Mr Varadkar also acknowledged the Government’s Stay and Spend initiative “isn’t much use” to businesses at the moment.
He told RTE Morning Ireland on Wednesday: “We’re telling people there to stay in their county, not to take trips around Ireland, unfortunately.
“We’re leaving that in place but we’re also doing the VAT cut, which actually isn’t much use to the industry at the moment either.
“But we decided that we would put it in place from November until December of 2021, so it will be there for all the next year so when they get back up and running again, they’ll have both incentives.”
Mr Varadkar said he hopes people will not face tax rises in the coming years following the Government’s huge spending plan.
“A lot of money is being borrowed, over 20 billion euros this year and next year,” he added.
“If we can get the economy going again, if we can get people back to work, the cost of things like PUP (Pandemic Unemployment Payment) will fall and people will pay income tax again, we might be able to close that gap without increasing taxes.”
He added it will depend on welfare payments like the PUP, as well as the outcome of Brexit, and how quickly the economy bounces back.
He also said there are huge amounts of savings in bank accounts, and urged people to spend local in the months before Christmas.
Mr Varadkar said plans for another cut to the PUP rate in February could be pushed back if the country is still facing tight Covid-19 restrictions.
Lot of budget hype about â¬billions but reality is crumbs from the table for workers & families. Nothing for renters, same old housing failures, too little too late in health, no reversal of PUP & wage subsidy cuts. Looks like we're not all in this together after all #Budget2021— Mary Lou McDonald (@MaryLouMcDonald) October 13, 2020
Sinn Fein president Mary Lou McDonald said it was a mistake by Government not to fully restore PUP to 350 euro per week.
“We are heading towards the winter with a very aggressive transmission and there is every possibility that we will have to have higher levels of restrictions across the state,” she added.
“In those circumstances, workers have a right to expect the state to intervene in a way that is more than tokenistic, (but) is effective and that supports them.
“The rates waiver needs to be extended until next year and and that should have been made clear.”