Chambers Ireland Budget 2021 Reaction
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Chambers Ireland Budget 2021 Reaction
Increased spending on infrastructure, wage supports and the commercial rates waiver will be welcomed by
business, but overall, there is still a need for greater focus on the recovery of our town centres
Following today’s publication of Budget 2021 by Ministers Paschal Donohoe and Michael McGrath, Chambers
Ireland welcomes the overall expansionary approach of the Government to address many of the needs of the
most exposed members of the business community to the twin crises of Brexit and Covid-19. Speaking this
afternoon, Chambers Ireland Chief Executive Ian Talbot said,
“We must enable and empower our SMEs – the drivers of economic growth in communities across the country
– to continue to compete and remain productive throughout the crisis. Most importantly, it means investing
in the places where we live and work, so that town and city centres can thrive. In many respects Government
has listened to this call. The increase in funding for housing and infrastructure and the creation of a €3.4 billion
Fund that will address impacts of both Brexit and COVID-19 is extremely welcome and will go a long way to
ensuring a sustainable, equitable recovery across the island.”
Under normal circumstances, with the economy performing as well as it has been pre-pandemic, we would be
expecting a very different Budget. But in the words of Ministers Donohoe and McGrath, the backdrop or
Budget 2021 is a truly remarkable one.
• The Covid-19 crisis has resulted in a severe economic change for Ireland. GDP fell by 6.1% in Q2 from Q1
and 3% below its level in Q2 20191
• The Covid-19 adjusted measure of unemployment is approximately 14.7%2. The Department of Finance
in its economic forecast underpinning Budget 2021 estimates that the unemployment rate will be 10.7%
in 20213
• A further 300,000 were being supported by the TWSS at the end of August (subsequently replaced the
EWSS on 1 September)4
• Tax revenue to end-September was €1.2 billion (or 3%) lower than in the same period last year.5 Efforts
to contain the increasing spread of COVID-19 are impacting on the ability of the economy to operate at
full capacity, with regional curtailments in economic activity
• The European Commission’s summer forecast noted that Ireland’s GDP is projected to contract by at least
8.5% in 2020.6
We called for a Budget which was centred on the theme of “Place” which would support businesses trade
through the pandemic, by supporting liquidity, local economies and the long-term investment needs of the
whole economy.
In a Budget like we face this year, we appreciate the challenge facing Government in delivering on every ask
of the business community. But there are missed opportunities in this Budget. Government should have done
significantly more to invest in the affordability of childcare and to support entrepreneurs through reform of
CGT and other entrepreneurial reliefs. They could also have been bolder in funding the recovery of urban
1
Parliamentary Budget Office (October 2020), Pre-Budget 2021 PBO Commentary.
2
While the standard measure of Monthly Unemployment was 5.4% in September 2020, the COVID-19 Adjusted Measure of Unemployment could
indicate a rate as high as 14.7% if all claimants of the PUP were classified as unemployed. Source: CSO Statistical Release (September 2020), Monthly
Unemployment.
3
Department of Finance, (October 2020), Budget 2021 Macroeconomic Outlook
4
TWSS scheme has now closed and the EWSS data is not yet available to the CSO for dissemination. Source: CSO Statistical Release (October 2020),
Detailed COVID-19 Income Support and Live Register Tables.
5
Parliamentary Budget Office (2020), Monthly Exchequer Taxation Analysis – September 2020
6
European Commission (2020), Summer 2020 Economic Forecast: An even deeper recession with wider divergences.
Chambers Ireland Budget 2021 Reaction
centres - there is an opportunity for the National Economic Plan to improve on this, and we will continue to
urge Government to use it.
Key Points
• Large expansion of investment in infrastructure, comprising mainly of transport and housing
• Establishment of a Brexit and Covid Fund of €3.4 billion
• New reduced VAT rates (23% and 9% for hospitality)
• Extension of the commercial rates waiver until the end of the year with €300m of shortfall in funding
of local authorities to be funded by Central Government
Missed Opportunities
• No significant change to Capital Gains Tax – although there is a commitment to review EIIS
• No change in tax relief for remote workers
• NO significant additional investment in affordable childcare
• Lack of clarity on funding for the recovery of town centresOur Asks Vs what was delivered
What we asked for What was announced
Goal 8: Decent Work & Economic Growth
Covid-19 stimulus supports for local economies
12-month waiver on commercial rates & shortfall in funding for LAs to be • Commercial rates waived until the end of this year, but no further
replaced by central Government commitment past December
• €300m in additional funding for LAs
Benefit-in-kind voucher up to the value of €1000 No mention- one for Finance Act
Benefit Scheme to replace the proposed tax credit for tourism and hospitality No mention- one for Finance Act
sector
Implement recommendations of Expert Taskforce on Aviation and on Tourism • Establishment of €3.4 billion Covid and Brexit economic recovery
and Hospitality Taskforce fund to help sectors such as hospitality, culture & aviation
• Hospitality VAT drop to 9% 1st November until December 2021
• Reduction in VAT from 23% to 21% effective immediately until
• Covid-19 Restrictions Support Scheme (CRSS) will provide
businesses with immediate funding if they are forced to close due
to level 3 or higher restrictions. The Government will pay them
based on their 2019 average weekly turn over. It will apply to
premises where restrictions directly prohibit or restrict access.
Payments will be calculated on the basis of 10 per cent of the first
€1 million in turnover and 5 per cent thereafter, based on average
VAT exclusive turnover for 2019. It will be subject to a maximum
weekly payment of €5,000.
• Exchequer support of €31.3m to our regional airports, including
€10 million support for Cork and Shannon airports
• €55 million for tourism business support scheme and €5 million for
a product development scheme.New Wage Subsidy Scheme for self-employed and sole traders • New scheme for self-employed to allow them to take up
intermittent work without losing their PUP benefit.
• EWSS and PUP to be extended beyond 31 March 2021
• Debt warehousing to be extended to allow the deferral of
payments with no interest, 3% thereafter and no surcharge
• Government to apply to EU SURE Fund (€2.5 billion) to fund the
wage subsidy schemes
• Earned Income Tax Credit for the self-employed increased by a
further €150, making it €1,650 per year
Expand grants for non-Rate payers Not mentioned
Fund a new six-month accelerator programme for existing and new tourism Not mentioned
companies
Supporting Entrepreneurs & SMEs
Reduce Capital Gains Tax rate of 33% for non-passive investment • Not committed to
• Amendment announced for the ordinary share holding
requirement so that an individual who has owned at least 5 per
cent of the shares for a continuous period of any three years
qualifies for this relief.
Increase the lifetime limit of €1 million in qualifying capital gains under Amendment of the ordinary share holding requirement so that an
Entrepreneur’s Relief individual who has owned at least 5 per cent of the shares for a
continuous period of any three years qualifies for this relief. Previously,
a person had to own at least 5 per cent for a continuous period of 3
years in the 5 years immediately prior to the disposal.
Review and Reform of the Key Employee Engagement Programme (KEEP) Not mentioned
Expand eligibility criteria for the R&D tax credit rate to medium enterprise Funding for R&D through the Covid products scheme and additional
expenditure on the IDA’s Regional Property Programme to support
investment in Ireland
Simplify reliefs (such as Retirement Relief) and integrate them within a more No commitment
expansive Entrepreneur’s Relief
Support serial entrepreneurship by introducing a “small business rollover” Not mentioned
mechanismTrade & Investment
Commit to 12.5% Corporation Tax • Commitment confirmed
• Roadmap on Ireland’s Corporation Tax Rate due to be published
soon (including the OECD’s BEPs proposal)
• New Intellectual property regime to come into effect immediately
• New Taxation Commission to be established
Contingency funding for companies impacted by Brexit • €3.4 billion will establish a Recovery Fund to stimulate demand and
employment resulting from Brexit and Covid-19
• €340 million of voted expenditure will be spent on Brexit supports
in 2021
• Government to look at availing of the EU’s Brexit Adjustment
Reserve once the technical details are finalised
Increased funding to expand current customs training programmes for SMEs Not mentioned
Increased supports for businesses who want to expand their operations in e- Not specifically mentioned, though there was an emphasis placed on
commerce and the Digital Single Market digital upskilling
Flexible & Accommodating Workplaces
Reform of the e-working allowance • Strategy due soon from the cross-departmental taskforce
• No review of the €3.20 daily allowance
Increase in individual tax rebate for working from home Cost of broadband and some other expenses in relation to working
from home can be claimed by Revenue (to be set out in their guidelines)
Increase resources to the Regional Skills Fora, in line with population • Funding for 10,000 upskilling and reskilling opportunities with
Solas and Skillnet Ireland including the Skills to Advance and Skills
to Compete programmes.
• €200m earmarked for training, skills development, work placement
schemes, recruitment subsidies, and job search and assistance
measures
Amalgamate all current supports under the Reasonable Accommodations Fund Not mentioned
into one grant that guarantees funding for specialised equipment for employees
Increase investment in the Irish Naturalisation and Immigration Service Not mentionedTarget funding for training of line-mangers and employers on how to implement Not mentioned
SME-friendly, agile and flexible polices in the workplace
Goal 11: Sustainable Cities & Communities
Funding a Town Centre First Initiative
Resourcing a Government’s Town Centre First Initiative Not mentioned but the Department of Rural and Community
Development is to receive €341 million and will fund the Town and
Village Renewal Scheme- one to watch for National Economic Plan
Expand the Living City Initiative to include long-term vacant commercial No- One for finance act
properties built post-1915
Amend the LCI by incorporating the costs of buying LCI qualifying properties No- one for Finance Act
into the relief and reduce the inheritance/CGT tax disincentives
Remove Regulatory Disincentives
Reform the Fair Deal Scheme so that when rental income accrues, the costs Not mentioned
associated with renting that dwelling is discounted from reckonable income
Introduce a targeted, time-bound, reduction of Construction VAT for affordable Not mentioned
high-density apartment new builds in cities
Reducing Vacancies
Better resource Local Authorities to initiate street improvement and active • €1.8bn funding announced for sustainable transport, cycling,
travel investments walking and greenways
• Additional €5.2 billion allocation to the Department of Housing in
2021. This will help to fund:
- €500 million of capital spending
- 9,500 new social housing units in 2021
Support Urbanism
Investment in the urban built environment to provide social and community Not mentioned
spaces and resources, akin to those in rural areasProvide funding to reform the planning system to ensure efficient decision €1.2 billion in funding for Land Development Agency to continue
making, in combination with the upskilling of Local Authority planning projects already underway and will deliver 9,000 affordable housing
departments and cost rental units
Goal 9: Industry, Innovation & Infrastructure
Finance Infrastructure Sustainably
Maintain the “Rainy Day Fund” The €1.5 billion contained in the Rainy Day Fund will be drawn down
and used in Budget 2021- unclear what future of scheme is
Investment in capital projects and infrastructure, with an open approach to PPP €1.6 billion in capital programmes under the NDP
to ensure progress
Improvement Transport Services
Invest in the commencement of MetroLink, intercity rail transport Metrolink, Dart Interconnector, and BusConnects are to receive
infrastructure, the Dublin rail interconnector, the Cork Suburban Rail Project & continued support
the BusConnects projects
Accelerate the Dart extension projects and establish a timeline towards 41 additional carriages for inter-city trains and the signing of the
developing an all-electric rail network contract for up to 600 carriages for Dart Plus. This will be the largest
ever fleet extension of rail infrastructure
Securing National Grid Infrastructure
Invest in the accelerated roll-out of a national fast-charging network for the EVs • Commitment to the purchase of EVs under GPP to enable the
with a focus on regional areas deployment of EVs across the public service fleet
Investment in electricity grid and Invest in biomethane technologies and Not mentioned
systems to provide renewable methane and hydrogen supply
Investment in water infrastructure, providing powers to State bodies to finance €44 million to Irish Water for remainder of 2020 to upgrade
such investment through land value capture infrastructure
Strengthen the Regions
Resource the Regional Assemblies so that they can develop territorial impact Review of the NDP is to ensure that capital spending (over €10 billion
assessments on central government policies, and proposed legislation, which now) will support regional development
can feed into the pre-legislative scrutiny processThe Digital Economy
Speedy implementation of a high-speed broadband throughout the country • €132 million for national broadband plan
• €341 million allocated to Dept of Community and Rural
Development, which will include broadband access points
• Under the Town and Village Renewal Scheme, there will be a €5
million investment in facilities for digital hubs and broadband
connection points across rural Ireland, aimed at enhancing remote
working capability and remote access.
Fund a civilian cybersecurity agency Not mentioned
Goal 13: Climate Action
Generating Renewable Energy
Increased investment in the electricity grid, including the progression of the Not mentioned
North-South Interconnector and the Celtic Interconnector
Allocate funding to support research into how the gas-networks can be future Not mentioned
proofed to transition from the delivery of natural gas, to hydrogen
Strategic investment into one or more Irish ports for the construction of Not mentioned
offshore wind farms
Fund research into future-proofing the gas-networks to transition from the Not mentioned
delivery of natural gas to renewable gas
Decarbonising Heat and Transport
Ringfence all Exchequer returns from Carbon Tax and strategically invest in • Increase of €7.50 per tonne of CO2 (now standing at €33.50 a
green infrastructure, public transport, and heating alternatives tonne) (Carbon tax increase for vehicles to be brought in with
immediate effect, and fuel, oil, home heating, etc. to be introduced
next year.
• €100 million of this will go into energy efficiency of homes, an 82
per cent increase on 2020. This will be for various grant schemes.
• Over €221m funding announced for residential and community
retrofit schemes. This €100 million increase in allocation is fundedthrough carbon tax revenue. Increased funding of €65m and is
aimed at supplying jobs (lower than anticipated)
Following any phased increases to the Carbon Tax, Government must commit Not mentioned
to carrying out impact assessments on the consequences for SMEs, commuters
and Border communities
Increase investment in the decarbonisation of public transport, particularly in €1 billion in public transport to form part of the climate transition and
cities, such as investment in bio-methane vehicles and the electrification of green recovery and will fund:
trains and buses • progress on major Project Ireland 2040 programmes including
BusConnects, MetroLink and the DART Expansion Programme;
• • the ongoing development of a range of Active Travel and
Greenway infrastructure projects; and
• • the enhancement of bus, rail and Local Link services
throughout the country, and will ensure the continuation of
services even with reduced capacity restrictions due to Covid-
19.
Invest in appropriate infrastructure to support the transition of Heavy Goods Not mentioned
Vehicles to low-carbon fuel options like Compressed Natural Gas
Use ring-fenced environmental fund revenues to broaden the coverage and €360m allocated across Government to support walking and cycling
density of shared use schemes projects nationwide
Accelerating the Transition to the Circular and Low Carbon Economy
Commit funding to expand the network of local authority energy agencies to Not mentioned
act as a local one-stop-shop structure providing practical advice
Classify SEAI supported retrofitting projects as zero VAT rated products Not mentioned
Introduce circular economy supports like the recent €600,000 DCCAE Circular Not mentioned
Economy Innovators fund to promote the circular economy
Invest in re-training programmes to support the transition from jobs reliant on • €65 million to fund retrofitting
fossil fuels to low carbon jobs, such as energy retrofitting for buildings, • 1,500 places for retrofitting upskilling/reskilling and supporting
sustainable forestry, renewable energy and peatland restoration to name a few employment in the emerging green economyFunding for research innovative technologies such as Carbon Capture Storage, Not mentioned
Hydrogen, Biogas and Anaerobic Digestion
Invest in measures that will support communities to meet afforestation and bog €5 million for peatland rehabilitation.
restoration targets
Climate Mitigation and Adaptation
Appropriate funding for flood defence infrastructure, technology investments Not mentioned
for flood resistance and resilience measures
Goal 5: Gender Equality
Accommodating Family Friendly Workplaces
Funding to enable a review of Paternity Benefit Not mentioned
A review of the amount of parental leave that the State provides over the Three additional weeks of parental leave introduced, that can be taken
course of an individual childhood, should occur in consideration of the extra by either parent in a minimum block of one week at a time
burden that Covid-19 has placed on families
Access to Affordable Quality Childcare
Increase investment in childcare services, early education infrastructure and €30 million for other services under the aegis of the Department- low
schools that are reopening to facilitate breakfast clubs and after school level of investment when compared to previous years
childcare
Continued investment in the Early Childhood Care and Education (ECCE) €638 million investment in early years, giving continued support for
both universal and targeted subsidies under the National Childcare
Scheme in 2021.You can also read
