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Pandemic Unemployment Payment (PUP) recipients will receive the Christmas bonus this year as long as they have been in the plan for four months.
After late discussions on Monday night between Minister of Public Expenditure Michael McGrath and Minister of Social Protection Heather Humphreys, the government will signal the measure on Tuesday.
The total cost of this year’s Christmas bonus is expected to be in the region of € 350 million, well above the € 279 million paid last year.
Typically, the qualification for the bond is limited to people who receive long-term welfare payments and those who are on the live registry for 15 months or more.
Sources confirmed that in the face of unprecedented circumstances, the government is reducing the eligibility criteria to four months.
Applicants who had previously signed PUPs and subsequently had to return to pay can combine pay periods to meet the requirement.
It has been estimated that 90 percent of the current 228,000 PUP beneficiaries will be eligible if they remain in the payment until early December when the Christmas bonus is paid.
As an exceptional and unique measure in 2020, those who receive job search payments will also receive the bonus if they have been on the scheme for four months instead of the usual 15 months.
The criteria will return to normal next year.
Working on my speech for tomorrow’s budget. Looking forward together with @Paschald to give our country a sense of hope, backed with very significant financial resources, that we are going to face the enormous challenges that we face. Let’s get out of this. pic.twitter.com/ceRjSjsesq
– Michael McGrath (@mmcgrathtd)
October 12, 2020
Ministers and officials spent Monday putting the final touches on the 2021 Budget, which will inject unprecedented resources into the economy in a bid to counter the effects of the pandemic.
Final details were completed by Mr. McGrath and Finance Minister Paschal Donohoe after a meeting with the three Coalition party leaders.
A large increase in health spending of up to an additional € 4 billion is expected, split between short-term measures to address Covid-19 and longer-term measures, including expanding the number of beds. Ministers are likely to announce more than 1,000 new hospital beds, as well as new intensive care unit beds.
The staffing of 300 new consulting doctors is expected, who will be offered a salary of € 250,000 per year to work exclusively in the public system.
Additional hiring is also anticipated at other public service locations, with 400 new special needs teachers and 1,000 special needs assistants. There will be an additional € 100 million a year to spend on education for people with disabilities, bringing the special education budget to € 2 billion for next year.
New money is expected for Tusla, the Agency for Children and Families, to fund support for domestic violence and provision for a number of unaccompanied refugee children moving to Ireland.
There will also likely be a large package of grants and supports for businesses impacted by Covid, including those that have been forced to close and those that are managing to stay open. A new scheme that involves weekly or monthly payments administered by Revenue is expected to be announced in an effort to keep as many businesses alive as possible during the pandemic.
Employees and the self-employed are likely to be allowed to earn perhaps up to € 120 per week, while still qualifying for pandemic unemployment pay (PUP), although these elements of the package are understood to have not yet been approved.
Sources also say that there will likely be an extension of the commercial fee waiver.
While no final decisions have been made yet, the tourism and hospitality sector is likely to see a VAT cut from 13.5% to 9%, although the higher VAT rate of 21% will return to 23% as scheduled next year.
It is expected that there will be an extension of the scheme that allows companies to postpone paying taxes.
Spending on housing
There will be important announcements for housing and for environmental measures such as modernization, with some reports suggesting that a new national modernization project worth up to 300 million euros could be presented. However, the € 7.50 increase in the carbon tax is likely to go ahead, although this will be offset for older and vulnerable citizens.
There will also be a reform of the vehicle registration tax system, which will incentivize motorists to switch to electric and hybrid vehicles, while penalizing the purchase of larger gasoline and diesel vehicles and SUVs.
There will also be other revenue-raising measures, including the regular increase, probably 50 cents, on a pack of 20 cigarettes. However, no increase in alcohol taxes is expected. Tax bands will not be indexed, leading to an increase of between € 300 million and € 400 million as higher wages push workers into the higher tax bands. A 1 percent tax on wagering discussed over the weekend is believed to be unlikely now. Changes in capital gains tax rates are unlikely after the Green Party opposed the proposed cuts, but there may be a change in capital gains tax thresholds.
The budget documents were to be signed on Monday evening, after which they will be printed and prepared for Tuesday. The Cabinet will be briefed on the full content of the Budget by the two ministers in a special meeting at 8 am on Tuesday morning.
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