The Government’s much-flagged jobs initiative will see a cut in the VAT rate on a range of tourism-related products and services in a bid to generate employment in the economy.
The plan, announced today by Minister for Finance Michael Noonan, also includes a multi-million euro building programme to upgrade the State’s roads and schools, and the creation of some 20,000 training places and internships for those without jobs.
The package of measures is to be funded by a 0.6 per cent levy on pensions for a period of four years, aimed at raising €470 million annually or €1.88 billion in total. The levy was higher than the 0.5 per cent figure that had been expected and drew criticism from pension brokers.
The initiative, which was promised in the Coalition’s programme for Government, proposes a cut in employers’ PRSI on pay of up to €356 per week, and the abolition of the controversial €3 air travel tax aimed at boosting the ailing tourism sector.
Mr Noonan also signalled the Government’s intention to reverse the cut in the minimum wage introduced in the last budget and to reform structures for setting wages at a sectoral level.
Specifically, the plan will see VAT on restaurants, hotels, cinemas, theatres, sporting fixtures and other attractions reduced from 13.5 per cent to 9 per cent.
Under the plan, €75 million has been earmarked for transport projects, some €60 million of which will be invested in the maintenance and repair of regional and local roads damaged by severe weather over the last two winters.
A further €15 million is to be invested in traffic management schemes and improvements to rail stations, footpaths, bus networks and cycle paths.
The plan also incorporates a €30 million school-building programme designed to create almost 3,000 construction-related jobs and which will commence this summer.
An additional €19 million is to be added to budget of the Department of Communications, Energy and Natural Resources, for a national energy retrofitting programme.
At a press conference with Labour leader Eamon Gilmore tonight, Taoiseach Enda Kenny said the Government had “hit the ground running” and was announcing the Jobs Initiative after ten weeks in office.
Asked what would be the actual number of new jobs created under this Initiative, Mr Kenny said: “It’s impossible to put a figure on the extent of jobs that can be created through a resurgence of confidence.”
Mr Gilmore added: “The whole focus of this government’s activity and our work is to bring about economic recovery and to get people back to work.”
Announcing the measures, Mr Noonan said there was no escaping the fact that the State did not have the resources to fund large-scale policy initiatives to help to generate economic activity.
“Because of the weak state of the public finances, the costs associated with the measures we are implementing as part of this jobs initiative must be paid for through the introduction of off-setting measures.”
This means the initiative must be budget-neutral over the period to 2014, he said.
The Minister admitted the impact of the initiative would be modest and added there would be no extravagant claims about its potential. But Mr Noonan claimed it would help rebuild confidence in households, businesses and among international investors.
Under the initiative, announced today, those in receipt of dole payments are to be offered an extra €50 a week to take on work experience. Some 5,000 places will be created for unemployed people under a new national internship scheme.
The placements will last between six to nine months at a time, within a limited two-year period. Mr Noonan said the plan would create 20,900 places in training, education and upskilling.
As previously announced, members of the Irish diaspora are to offered a €3,000 finder’s fee for foreign investments that results in sustained employment in Ireland under the plan.
The Professional Insurance Brokers Association (Piba), which represents half the country's 1,800 brokers, strongly criticised the levy on private pension funds, without clarity on the Government’s intention on pension tax relief.
