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Government Announces 'Staycation Subsidy' And Wage Subsidy Extension

Published on Jul 24 2020 9:31 AM in General Industry tagged: Featured Post / ITIC / IHF / Restaurants Association of Ireland / VFI / LVA / RAI / Irish hotels federation / Vintners' Federation of Ireland / Licensed Vintners Association / Irish Tourism Industry Confederation / Drinks Ireland

Government Announces 'Staycation Subsidy' And Wage Subsidy Extension

The Irish government has announced a "Staycation Subsidy" and an extension of the Temporary Wage Subsidy Scheme (TWSS) as part of its July stimulus package.

The "Staycation Subsidy" will allow people who go on staycations between October of 2020 and April of 2021 to claim tax back on hotel and restaurant bills. The scheme will apply to hotels, food and non-alcoholic beverages, and will allow staycationers and diners who spend €625 to claim €125 back in income tax credit, while couples will be able to claim €250.

Consumers will be able to upload their staycation and food receipts to a phone app to claim the tax credit.

Meanwhile, TWSS is being extended until the end of March of 2021, but will be transformed into the Employment Wage Scheme from September. This new version of the scheme will provide businesses that have experienced a drop in turnover to under 30% with a €205 per employee weekly state subsidy, and will include seasonal and new employees.

New companies that operate in industries that have been particularly adversely impacted by the COVID-19 crisis will also be eligible for the new wage scheme.

ITIC Response

As reported by The Irish Times, Irish Tourism Industry Confederation (ITIC) chief executive Eoghan O'Mara Walsh said that while the "Staycation Subsidy" and wage scheme extension are important first steps, "much more is needed".

O'Mara Walsh stated, "Although the domestic market is important, it can never cover the lost earnings from overseas visitors. As many as 20,000 tourism and hospitality businesses are clinging on by their fingertips, and they need wide-scale financial support to prevent significant job losses and business closures, particularly in regional Ireland.

"We are particularly disappointed that the tourism VAT rate was not cut to stimulate demand and put Ireland on a competitive footing with the UK and rest of Europe."

IHF Response

Meanwhile, Irish Hotels Federation (IHF) president Elaina Fitzgerald Kane commented, "While measures to stimulate consumer demand are welcome, we have serious doubts about how effective the 'stay and spend' tax credit scheme will be in stimulating consumer demand. It seems overly cumbersome and convoluted, and we are urgently seeking further clarification from the government on how the measure will operate.

"We are disappointed that the government failed to deliver a reduction in tourism VAT. This is a missed opportunity given how highly effective the previous reduced VAT rate was in promoting increased employment. We will be engaging further with the government on this and other measures as part of the October National Economic Plan."

Fitzgerald Kane added, "The new wage support scheme is welcome and will help hospitality businesses to keep their teams together until tourism and the overseas market recovers. The inclusion of seasonal workers and new hires is especially important.

"Other measures such as the rates waiver and reopening grants could give businesses much needed breathing space as they work to stabilise their businesses for the future, and we look forward to seeing the details there. There is a concern that the rates waiver does not go far enough, and we hope that this is addressed as part of the national economic plan in line with what is being done in the UK.

"We also welcome the additional supports being put in place for training, which is hugely important as we build capability and our skills base for the future."

RAI Response

Reacting to the stimulus package on behalf of the Restaurants Association of Ireland (RAI), the association's CEO, Adrian Cummins, said, "By not decreasing the tourism and hospitality VAT rate in line with our EU counterparts and closest neighbour, [the] July Stimulus has put a nail in the coffin for border restaurant and hospitality businesses competing with 5% rate in Northern Ireland

"We are questioning the decision not to include a grants package for tourism and hospitality in [the] July stimulus. We appeal to the government to support businesses to reopen, to retain employees and keep the economy going.

"To ignore immediate legislative issues such as insurance reform and commercial leases until October's Budget would result in the demise of a significant number of businesses and immediate job losses.

"I am appealing to the government to rethink this decision and to support independent tourism and hospitality businesses around the country with a targeted grants package."

LVA , VFI And Drinks Ireland Responses

The Vintners Federation of Ireland (VFI), Licensed Vintners Association (LVA) and Drinks Ireland all welcomed the extension of the TWSS, saying that it will provide additional certainty to businesses and employees, and the three organisations also acknowledged that the "Staycation Subsidy" scheme will deliver for hotels.

However, VFI CEO Padraig Cribben stated, "While the measures announced are welcome, they are only a start", and LVA CEO Donall O'Keeffe commented, "The reduction in VAT is a start, but we need to consider the reality of the new business model within which pubs are operating. Government guidelines and COVID measures limit the capacity of pubs to trade, which means demand is reduced, capacity is significantly decreased and consumers' ability to spend in pubs is capped. Government support needs to be cognisant of this reality, and we remain open and willing to engage with the government in meaningful consultation in the period ahead to fully consider this employment-intensive, domestic sector."

Drinks Ireland director Patricia Callan added, "While any and all supports are welcome, we need to continue to assess and review their impact. The environment in which the drinks and hospitality industry is operating is abnormal, and this is set to continue. We must look to the COVID measures implemented in the EU and consider their impact while also reviewing the progress of our own measures announced [as part of the July stimulus package]. This is important ahead of the National Economic Plan in October and in protecting the longer term viability of Irish pubs as they continue to alter their business model to operate within the confines and realities of COVID in the long term."

© 2020 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.

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