Stay and spend scheme to close and will not be replaced – Donohoe

Minister for Finance Paschal Donohoe has confirmed the stay and spend tax incentive will close on April 30th and there are no plans for a replacement.

The Covid-19 support scheme was introduced last year with a view to encourage Irish people to holiday at home during the “shoulder season” between October and April, with a tax credit of €125 for each person, or €250 per couple.

Mr Donohoe had calculated the scheme would cost the State €270 million over two years.

However, soon after its introduction the State went into a series of rigorous lockdowns culminating with the Level 5 lockdown which has been ongoing since early January.

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Instead of more than 2 million taxpayers availing of the incentive with a cost of €270 million, only about 60,000 submitted claims with an overall cost of €2 million.

In a response to a parliamentary question from Fianna Fáil TD Pádraig O’Sullivan, Mr Donohoe has confirmed the scheme is being wound down with no replacement.

Mr Donohoe said the interests of the tax payers would “not be best served by extending the scheme over the summer months in circumstances where we will all be staying at home and hopefully holidaying in Ireland”.

He indicated that such will be the demand for accommodation and hospitality during the summer months that there will be no need for an incentive to encourage people to holiday in Ireland.

He also confirmed to Mr O’Sullivan that his department was not examining any alternative to the stay and spend tax credit scheme at the present time.

However, he added that he may “take stock” again in a number of months and make a decision on if the termination of the scheme needs to be reconsidered.

When it became clear that the scheme could not be availed of, a large number of TDs called for it to be reintroduced when lockdown came to an end, or for the €270 million in promised funding to be ring-fenced for similar schemes. The Independent TD for Roscommon-Galway Denis Naughten called for it to be replaced with more straightforward voucher schemes.

Mr Donohoe did not accept the arguments advanced but pointed out there were other incentives geared towards hospitality and tourism including a reduction from 13.5 per cent to 9 per cent in the VAT rate.

“Public health restrictions have had the effect of impeding the operation of the incentive as originally envisaged,” he said, in reply to another parliamentary questioning, also pointing out that the allotted funding was for this scheme only and would not transfer to any other scheme or fund.