Millions of Euros set aside for the Stay and Spend scheme could be used to reduce the tax bills people are facing for their coronavirus supports.

The €250m Stay and Spend scheme was introduced in October in a bid to stimulate the COVID-hit hospitality industry.

The entire sector was shut down just three weeks later and figures obtained by Labour Party TD Ged Nash show that up to last week, just over €300,000 had been claimed under the scheme.

Meanwhile, around 420,000 workers have received tax bills for the coronavirus supports they received during the year – with over 130,000 facing bills of €100 or more.

   

On Newstalk Breakfast this morning, Deputy Nash said the Stay and Spend money should be used to reduce the tax bills for struggling workers.

“Essentially what I am saying is that a better way of stimulating the economy would be to waive the tax bills that 420,000 workers [Sic] on the TWSS received last week,” he said.

“Most of those workers would owe under around €600 or €700 so it is a relatively small amount of money but it would achieve the same thing that the Stay and Spend scheme was attempting to do – and that was to stimulate the local economy.

“So, rather than giving that money back to the Revenue Commissioners, the best thing to do would be to stimulate local economies by putting that money back into the pockets of those who were on the wage subsidy scheme.”

Economic stimulus

Deputy Nash said the Temporary Wage Subsidy Scheme was fundamentally a subsidy to the employer and noted that most workers it was used for “would be in the low and middle-income bracket.”

He said these are the people most likely to spend the money in the local economy should it be used to waive pandemic support tax bills.

“We have got a bit of a two-tier situation happening at the moment,” he said.

“If you are working for a multi-national working from home, you are probably doing OK. You are one of those people who have managed to add to your bank account – about €12bn in additional savings has appeared in bank accounts over the last few months

“So, when that moment is released, hopefully when we get through this crisis we are seeing at the moment, that will act in itself as stimulus for local economies across the country

“But the reality is that those who have been on the TWSS are low and middle incomed earners who are likely to spend and not to save.”

Hospitality

He said there is nothing surprising about the very-low uptake of the Stay and Spend – noting that despite a short reopening over Christmas, the sector has been largely closed since it was introduced.

“I said at the time demand would be low because the sector itself did not have a demand problem,” he said. “There was no consumer demand issue

“The problem the hospitality sector had was one of confidence and the public health issue around the pandemic so that was very clear.

“So, I wouldn’t expect an awful lot more to be drawn down – possibly another few million over the next few months if hospitality gets to open to any level over the next period of time.”

The scheme is currently due to run until the end of April.

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