Ireland’s budget for 2021 has been delivered by Finance Minister Paschal Donohoe in the Dail, with the package estimated to be worth around €17.7bn.
One of the major points in Budget 2021 is the €3.4bn recovery fund aimed at increasing employment, which will be a targeted effort to boost domestic demand.
The Department of Finance is forecasting a total loss of 320,000 jobs this year, though expects a recovery of 155,000 jobs in 2021. A deficit of €21.5bn will be recorded this year.
The budget was created on the backdrop of the Covid-19 pandemic and a lack of vaccine, and the potential of a hard Brexit, with the budget framed on the basis of a lack of bilateral trade agreement between the UK and the EU. €340m of voted expenditure will be spent on Brexit supports in 2021, including money for ports and airports, in addition to staff for customs.
The VAT rate for hospitality will be reduced from November 1st until December 2021 to a rate of 9%, with the Temporary Wage Subsidy Scheme (TWSS) or a similar expected to remain in place to the end of 2021.
A ‘COVID-19 restrictions support scheme’ is to be created with the intent of providing targeted support for businesses that have temporarily closed because of the pandemic. Those working from home due to Covid-19 will also be able to claim a tax deduction – where an employer makes no contribution – toward heat, light and broadband.
It was also announced that Ireland has signed up to EU advance purchase agreements for potential COVID-19 vaccines.
An extra €4bn will be allocated to the health service in this budget, which will see an increase in critical care beds to 321 by the end of 2020, and an extra 1,146 acute beds introduced.
Other healthcare expenditure included €5m on community-based dementia supports, €50m on new drugs, €25m on the Healthy Ireland and National Drugs Strategy, €38m for mental health services, and €100m on disability services. There will also be five million additional home care hours made available.
Schools will also benefit from the budget, with €80m being made available for the School Building Programme, ICT and the minor works scheme, in addition to €270m for higher education building project.
Transport will also see a boost, with the government expected to purchase 41 additional InterCity railcar carriages, with funding also expected for the BusConnects project.
Other measures announced by Minister Donohue include a raise in carbon tax by €7.50 a tonne from midnight tonight, as well as an increase of 50 cent on cigarettes, bringing the cost of a packet of 20 to €14. There have been no broad changes to income tax credits or bands, and no change to the 12.5% Corporation tax.