Eire is getting ready for the twin risk of Brexit and coronavirus with a mega price range
Ireland's Finance Minister Paschal Donohoe.
Leon Farrell | PA Images via Getty Images
DUBLIN – The Irish government has tabled what it calls "the largest in the history of the state" as it addresses the dual threats of coronavirus and Brexit.
The € 17.75 billion ($ 20.8 billion) budget announced on Tuesday was created on the assumption that there will be no trade deal between the EU and the UK and that no coronavirus vaccine will be widely available in 2021.
This package includes a € 3.4 billion recovery fund, € 8.5 billion for public services and another € 4 billion for health – while offsetting the government's climate commitments, including a carbon tax hike.
Finance Minister Paschal Donohoe and Minister for Public Spending and Reforms Michael McGrath presented their budget packages to Parliament amid the difficult economic outlook for Ireland.
Donohoe forecast a deficit of 21.5 billion euros for 2020 and a deficit of 20.5 billion euros for 2021.
A number of measures have been put in place to prevent further job losses and to support companies affected by the pandemic.
Some of these measures include 1.1 billion euros granted to the Department of Business, which oversees the Covid Support Fund for startups and small businesses, a VAT reduction for hospitality businesses to 9% by December 2021, 55 million euros for the Support program for tourism companies and a 50 million euro fund for live entertainment.
A new cross-departmental group is also being formed to develop proposals for leveraging EU funds and to set up an equity fund to invest in "domestic high-innovation companies".
In addition, a program called the Covid-19 Restrictions Support Scheme offers companies up to $ 5,000 per week if they have to close due to coronavirus restrictions.
The entire country was recently moved to stage three of Ireland's coronavirus plans, forcing some companies to close again or operate under tighter restrictions.
Further funds are earmarked for supporting Brexit in 2021. This includes additional funding for the Department of Agriculture as these exports to the UK are expected to be heavily impacted by Brexit, as well as provisions for hiring more customs staff as part of upgrades at airports and ports.
The country's carbon tax will also rise from 26 euros per ton of carbon dioxide to 33.50 euros.
Irish corporate tax rate of 12.5% is expected to remain unchanged.
Donohoe said the treasury had booked just under 7.5 billion euros in corporate tax revenue this year.
"This has played an essential role in funding pandemic-related spending," Donohoe said, but admitted that some form of change was likely.
"More work is needed at international level. What is certain, however, is that change is inevitable," he said.
"An agreement at OECD level would pose challenges for Ireland as changes in the international tax framework would lead to a reduction in taxable profits. Failure to reach an agreement on OECD would also have negative consequences for the treasury. Work will be next Reach a crucial stage in the year. "