Budget 2021 'unprecedented in both size and scale'

The Minister for Finance says that this year's €17.75bn budget package is “unprecedented in both size and scale”.

Delivering his Budget 2021 speech a short while ago in the Convention Centre, Minister Paschal Donohoe was optimistic in tone, while also recognising the challenge posed by coronavirus pandemic.

“We are now responding to the worst global pandemic in a century,” he said of the numbers he was presenting to members.

“More homes, improved healthcare and a better national response to climate change” are identified as key objectives in Budget 2021.

Noting that Covid 19 has “disrupted to what is central to our national economy” he said: “The test we face is daunting, further demanding choices need to be made,” and “Yes, we will prevail. From the ashes of the pandemic we will build a stronger and more resilient Ireland.”

He described Budget 2021 as “a bridge to that Ireland”. Referencing last year's surplus of €1.3bn Minister Donohoe the fact that the nearly €20bn earmarked for this year's is eight times last year's budget.

“Healthcare and healthy economy are interdependent,” he said noting that the 21 figures are “prepared against a background of extraordinary responses”.

The minister said the numbers are framed on the basis of no bilateral trade deal between the EU and UK and the continued presence of the virus and the absence of a vaccine for the next year.

Minister Donohoe told the Dáil the government were “steadfast in overcoming unemployment among our young”.

“Our key objective is to ensure that economic policy does not compound the problems that are faced by the country.

The budget will run to €17 ¾ bn which he described as “unprecedented in size and scale and the impact will be in every home and business in the country”.

A deficit of €20.5bn or 6.2% is currently projected for 2020.

Minister Donohoe has announced a new scheme to provide targeted support for businesses, to help those businesses impacted or closed as a result of Covid-19 restrictions. The scheme will be effective from today until 31 March 2021.

Payments will be calculated on the basis of 10% of the first €1m in turnover or 5% thereafter, based on average VAT exclusive turnover for 2019 and subject to a maximum weekly payment of €5,000.

Minister Donohoe spoke of extending the reduction in standard rate of Value Added Tax from 23% to 21%, announced earlier this month, but an additional reduction for the hospitality sector which will see the 13.5% VAT rate reduced to 9% with effect from November 1.

The Finance minister says there are no broad changes to income tax credits or bands, but the ceiling of the second USC rate band will be increased from €20,484 to €20,687. The weekly threshold for the higher rate of employer's PRSI will be changed from €394 to €398. Cigarettes will see a price hike of .50c per box.

Tackling Climate Change was identified as a specific goal of the government and to this end carbon tax will be increased by €7.50 per tonne from midnight tonight. To this end there will be a number of changes to the way car tax is applied.

A third Motor Tax table for cars registered from 1 January 2021 is being opened to take account of the introduction of the WLTP emissions test.

VRT reliefs for Plug-in Hybrid Electric Vehicles and hybrids will be allowed to expire and relief for Battery Electric Vehicles to be tapered.

He said that Ireland is “way off course” to meet our climate change commitments.

The Minister conclude by paying tribute to the “heroes of this period” saying there will be additional supports for them in this Budget. He extend sympathies to all who have lost life and health.

“2020 is the the most challenging year we have experienced as a nation, but there is hope and we will come out of this crisis,” Minister Donohe said.

His final words referenced poet Seamus Heaney: “If we winter this out, we can summer anywhere.”