I move: "That the Bill be now read a Second Time."
We are here today to discuss the legislation that will give effect to some of the decisions announced on 1 June as part of the Government's economic plan, which sets out a new phase of supports for this next stage of recovery as businesses reopen. In the past few weeks, it has been possible to ease restrictions as more and more citizens, including the most vulnerable, are vaccinated. A more cautious approach is being taken for the next phase of reopening following the most recent public health advice. The Government recognises this is difficult for many sectors, and particularly for so many businesses that believed they would be able to open next week.
We are seeing significant reductions in the number in receipt of the pandemic unemployment payment, PUP, as employees go back to work. According to Department of Social Protection data, nearly 90,000 people came off the PUP in the four weeks leading to 22 June, and a further decrease, of 16,000, occurred in the week to 29 June.
This Bill is relatively short but it provides certainty to businesses as public health restrictions are eased. It allows them to plan as they reopen and resume trading at a normal level. This is urgent legislation since two of the Government support schemes, the employment wage subsidy scheme, EWSS, and the Covid-19 restrictions support scheme, CRSS, were both due to expire on 30 June. However, the Revenue Commissioners may operate these schemes for a short period under care and management provisions of the Taxes Consolidation Act so payments can continue.
I pay tribute to the Revenue Commissioners and staff who operated the various schemes, including the EWSS and the CRSS, that provided much-needed support to businesses in a very responsive way. The Minister for Finance has asked me to inform the House that he requested the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach to agree to waive pre-legislative scrutiny of this Bill in recognition of its urgent objective of providing necessary supports to businesses. The committee has agreed to this waiver.
The Bill will provide a legislative basis for the actions agreed by the Government at the start of June to support businesses. Let me outline these measures. The EWSS will be extended to 31 December 2021. The CRSS will be extended and enhanced to provide additional supports to businesses upon reopening and give certainty to businesses still directly affected by public health restrictions. A new additional business support scheme, to be called the business resumption support scheme, BRSS, will be for businesses with reduced turnover as a result of public health restrictions, and it will be implemented in September 2021. The tax debt warehousing scheme will be extended. This is to allow the period in which liabilities arising can be warehoused to be extended to the end of 2021 for all eligible taxpayers, with an interest-free period during 2022 and to include overpayments under the EWSS in the scheme. The reduced rate of VAT, 9%, applying temporarily to hospitality and tourism-related goods and services will be extended until 31 August 2022.
The Bill will also put the financial resolutions of 19 May, which introduced the 10% stamp duty charge on multiple purchases of houses, on a permanent statutory footing. In addition, on the advice of the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, the Bill will provide for an exemption from the 10% stamp duty charge for the provision of the mortgage-to-rent scheme by private sector participants. Mortgage to rent is an important part of the broader social and affordable housing agenda. Members should note the Minister's intention, again on the advice of the Minister for Housing, Local Government and Heritage, to introduce an amendment on Committee Stage to facilitate an exemption from the 10% stamp duty charge in circumstances where houses are bought by investors for leasing to local authorities.
The Bill is relatively short and contains 15 sections. I will run through them in brief. The first 12 deal with the various business supports and the remaining ones deal with the stamp duty issue and the financial resolutions passed by the Dáil on 19 May.
Section 1 is a definitions section.
Section 2 provides for the extension of the EWSS to 31 September 2021 and the retention of the current enhanced subsidy rates until 30 September 2021. It does this by amending section 28B, inserted by the Financial Provisions (Covid-19) (No. 2) Act 2020, of the Emergency Measures in the Public Interest (Covid-19) Act 2020. It also provides for the retention of the 30% reduction in turnover or orders threshold and a modification to widen the reference period to assess eligibility for the scheme, with effect from 1 July 2021. The EWSS is a central pillar of our response to this pandemic, supporting businesses, encouraging employment and helping to maintain the links between employers and employees. As of today, direct subsidy payments of over €3.75 billion have been made, with an additional €611 million given in PRSI relief to over 50,300 employers in respect of 600,000 workers.
Sections 3 and 4 make several changes in relation to the CRSS. They provide for the extension of the scheme to September 2021. The power of the Minister for Finance to extend the scheme further, to 31 December 2021, by order, is not changed. I will undertake an assessment in September to consider the extension of the scheme to the end of December 2021.
In addition, section 4 provides for enhanced restart week payments under the scheme for businesses reopening after a period of restriction. Under the amended provisions, the level of restart week payment a business may claim will depend on the date on which it reopens. I will go into detail on that. Where the business reopened between 29 April and 1 June 2021, it may claim for a restart payment equal to two weeks at double the normal rate for the CRSS, subject to a maximum weekly payment of €5,000. Where the business reopens between 2 June 2021 and 31 December 2021, it may claim for a restart payment equal to three weeks at double the normal rate for the CRSS, and that is subject to a maximum weekly amount of €10,000. In all other cases, the standard restart week payment will apply, which is one week at the standard rate for the CRSS, subject to a maximum weekly amount of €5,000. A business may qualify once for either the double restart week payment or the triple restart week payment. The scheme has been very effective in providing targeted support to businesses that were forced to close or restrict access to their premises on foot of public health restrictions. There are currently 22,800 businesses, with 26,800 premises, registered for the CRSS with the Revenue Commissioners. In total, €636 million has been claimed by businesses under the scheme, with over 11,000 premises claiming restart payments as restrictions have eased in some sectors.
Following the announcement on Tuesday, 29 June 2021 that the reopening of indoor dining will not proceed next Monday, as planned, the Government agreed that the CRSS would be amended to allow for a double week payment to businesses that remain closed or are significantly restricted under the public health restrictions from the week commencing 5 July for two weeks, subject to the statutory cap of €5,000 per week. The Minister intends to make an amendment to the Bill on Committee Stage to provide for these additional payments.
Section 5 provides for the BRSS, which gives a new support to businesses that have been significantly impacted throughout the Covid-19 pandemic. It inserts a new section, section 485A, into the Taxes Consolidation Act that makes provision for the BRSS. I will now outline the scheme's key features.
First, the scheme is first available to affected self-employed individuals and companies who carry on a trade or trading activities, the profits from which are "chargeable to tax under Case I of Schedule D". It is also available to persons who carry on a trade in partnership and any trading activity carried on by charities and sporting bodies. To qualify under this scheme, a business must be able to demonstrate that its turnover under the defined specified period of 1 September 2020 to 31 August 2021 will be no more than 25% of their turnover in 2019. Additional provisions are made in respect of businesses that commenced trading later than the end of 2019. Qualifying businesses will be able to make a claim for payment calculated on the basis of three weeks of 10% of the first €20,000 weekly turnover and 5% thereafter. This is based on average turnover for 2019 and will be subject to a maximum payment of €15,000. Payments made under the scheme will be treated as an advance credit for trading expenses.
To make a claim under the scheme a number of other conditions must be satisfied including that the person has an up-to-date tax clearance certificate, that he or she has complied with their value-added tax obligations, that he or she is not entitled to make a claim for the CRSS on 1 September 2021 and that the business is actively carrying on its trade and has an intention to continue to do so. The person must register the claim on the Revenue online service and must make a declaration that the person satisfies the conditions to make a claim under this section. Provision is made for the publication of the name of claimants of BRSS on the Revenue’s website.
This new scheme is designed to support some of the worst affected businesses during the pandemic and especially those that continue to be significantly impacted, even after the easing of public health restrictions. The scheme is designed to be as inclusive as possible. It is subject to the key requirement that turnover is significantly impacted and will apply first to businesses that qualified for CRSS but no longer do so on 1 September. Second, it will apply to businesses that qualify for supports provided to employers under the employment wage subsidy scheme. Third, it will apply to businesses that may have qualified for other sectoral supports such as the small business assistance scheme for Covid, SBASC, and Fáilte Ireland’s tourism business continuity scheme.
As I have said, the intention of the scheme is to assist businesses which were significantly impacted throughout the pandemic and to be as inclusive as possible. Anchors necessarily included in the CRSS, such as that to have a fixed business premises and that access to this premises was restricted or prohibited, are not included in the BRSS. In addition, the scheme will be open to sectors that did not qualify for CRSS because of specific tax requirements, such as charities and sporting bodies. It is intended that the registration for the BRSS will open from 1 September.
As Deputies will be aware, the Finance Act 2020 provided that a temporarily reduced rate of value added tax of 9% applies from 1 November 2022 to 31 December 2021 to the supply of restaurant and catering services, guest and holiday accommodation, and entertainment services such as admission to cinemas, theatres, museums, fairgrounds, amusement park and sporting facilities, as well as to hairdressers and the use of certain printed matter such as brochures, maps and programmes. Section 6 extends the application of the 9% VAT rate to these supplies to continue until 31 August 2022.
I mentioned earlier the ability of the Revenue Commissioners to provide much-needed and timely support to businesses. Debt warehousing has provided over 86,000 individual businesses with vital liquidity support. This includes 2,600 large cases and medium enterprise division taxpayers, which has significant employment implications.
At the end of May some €2.4 billion of tax debt had been warehoused. The main components were VAT at €1.3 billion and employer PAYE at €1.1 billion.
The next sections of the Bill, sections 7 to 12, make further provision for warehousing. In all cases the warehousing scheme will have three phases or periods. Period 1 will be extended until 31 December 2021; period 2, called the zero interest phase, will run from 1 January 2022 until 31 December 2022, during which time no interest will be charged on warehoused relevant tax from period 1; and period 3, the reduced interest phase, will run from 1 January 2023 until the relevant tax is repaid to Revenue. During Period 3, interest will be charged at approximately 3% per annum on warehoused relevant tax from period 1.
Warehousing is available to businesses which, as a consequence of Covid-19, are unable to pay their relevant tax and which have filed all relevant PAYE and EWSS returns. The extension of the scheme and streamlining of the dates of each period will give clarity and certainty to businesses as to their tax liabilities for the remainder of 2021 and will assist them with their cash flow as they seek to recover from such a difficult trading period. Section 7 provides for the warehousing of EWSS overpayments received by employers which must be refunded to Revenue. Section 8 deals with refunds of the temporary wage subsidy scheme, TWSS, payments. Section 9 deals with PAYE, section 10 deals with certain income tax, section 11 deals with VAT and section 12 deals with PRSI.
Deputies will recall that a financial resolution was approved by the Dáil on 19 May 2021 in order to amend the Stamp Duties Consolidation Act 1999 through the insertion of a new section 31E titled “Stamp duty on certain acquisitions of residential property”. The purpose of this new section is to impose a higher stamp duty on multiple purchases of residential units, and the financial resolution allowed it to have immediate effect. It forms part of the Government’s response to the recent phenomenon of the purchasing in bulk by commercial institutional investors of homes at or near completion in competition with the owner-occupier market.
Section 13 of this Bill places Section 31E of the Stamp Duties Consolidation Act 1999 on a permanent statutory footing. As the Members will recall, this section imposes a 10% rate of stamp duty on the acquisition, on or after 20 May 2021, of certain types of residential units where an aggregate of ten or more such units is acquired during a rolling 12-month period. This is a significant increase on the standard stamp duty rates that apply to the acquisition of residential property, which is 1% of the value of property up to €1 million and 2% of the value that exceeds €1 million. The 10% rate applies in respect of the acquisition of residential units, such as houses and duplexes but not apartments. The measure is intended to disincentivise the purchase of multiple residential units by a single corporate entity or individual. The section also contains a number of anti-avoidance provisions.
Turning to section 14, a key area in the broader social housing agenda is the mortgage to rent, MTR, scheme. Approved housing bodies, which are exempt from the 10% stamp duty, are an integral part of the MTR scheme and their participation in the scheme has enabled a significant number of borrowers to remain in their home as social housing tenants. In an effort to increase the potential of the scheme to meet the needs of more borrowers, the Government has provided for non-approved housing body entities, that is, private sector participants, to purchase properties under the scheme to increase the scale of successful cases that could benefit from the scheme over time. However, as things stand, these private sector participants are not exempt from the higher stamp duty rate. The Government has agreed that an exemption from the 10% stamp duty would be provided for them and section 14 of this Bill is drafted to facilitate this.
Finally, section 15 is the usual section with the Short Title of the Bill.
In conclusion, the Government has kept its promise that there will be no cliff-edge to supports for businesses and it is extending and enhancing supports to business as they reopen. The new business resumption support scheme will provide additional support to the businesses worst affected by the restrictions imposed due to the pandemic. The EWSS and CRSS will be extended. The tax debt warehousing scheme will be extended to the end of this year, with no interest charged throughout 2022.
On 19 May, the Minister, Deputy Donohoe, informed the House of his intention to place the financial resolution agreed that evening on a permanent legislative footing. This Bill will do that, as well as taking care of certain other aspects of the stamp duty for multiple purchases of houses and I commend it to the House.