The Irish Tax Institute welcomes the Jobs Stimulus measures announced by the government this afternoon. The overall investment package of more than €7 billion will save jobs by providing a vital boost to businesses forced to close or severely curtail their trade since the pandemic restrictions were introduced five months ago.
Institute President, Frank Mitchell particularly welcomed the clarity provided in the announcement about the future of the Temporary Wage Subsidy Scheme. “Over the past 5 months, this Scheme has been a lifeline for many businesses. Its successor, the new Employment Wage Support Scheme will support job retention and job creation in a broad range of businesses as they trade their way back to profitability in the coming months.”
The Institute also welcomes the measures to refund corporation and income tax to businesses that have incurred losses due to the pandemic. “We had recommended to Government the carry back of corporation tax losses for previously profitable businesses. We are very pleased to see that idea reflected in today’s announcement and its extension to income tax relief for self-employed individuals who had been profitable prior to the pandemic. Both measures will provide an immediate cashflow benefit for these entities while giving the taxpayer comfort that resources are being invested in viable, revenue and employment generating businesses,” said Mr Mitchell.
He also welcomed the extension of the reduced 3% interest rate on warehoused VAT and payroll tax liabilities to all tax debts agreed before 30 September 2020 which, he said would undoubtedly help the many businesses that will have difficulty meeting payment deadlines this year. “But the Institute would like the government to go further and make this reduced rate a permanent feature of our tax system. The existing rates of 8% and 10% are, based upon prevailing market rates, clearly penal and tax legislation already imposes a myriad of fixed and tax geared penalties, so such a high rate of interest appears unjustifiable. An interest rate of 3%, which is still higher than that imposed in the UK, would recompense the exchequer and act as a disincentive to late payments. This is a good and fair reform that should be maintained beyond the current crisis,” said Mr Mitchell.
The reduction in the standard VAT rate from 23% to 21% will, according to the Institute, benefit all sectors of the economy and provide a confidence boost to consumers. The Stay and Spend tax incentive will be a boost to the hospitality sector which has borne the brunt of the Covid-19 crisis. Noting that the Job Stimulus announcement contained no reference to Capital Gains Tax, Mr Mitchell urged the Government to fulfil its commitment to review this tax in the forthcoming budget.
“These tax measures are targeted to assist the recovery. We look forward to seeing the legislation underpinning these changes as well as the legislation to give effect to the tax debt warehousing arrangements announced by the government in May,” concluded Mr Mitchell.