PwC urges Government to extend pandemic wage-support scheme

The Government should extend its main pandemic wage-support scheme until the middle of next year, PwC has said. In a pre-budget submission, the consultancy called for the employment wage subsidy scheme to be extended until the end of June 2022.

The scheme should be tapered from January next year, PwC advised, “thus ensuring that there are no sharp U-turns or shocks to recovering businesses”.

The Government has spent close to €4 billion on the scheme, which sees it subsidise the wages of workers in the worst-impacted sectors, and has pledged to extend it to at least the end of this year.

“Many sectors will unfortunately already have or will miss their peak annual trading period, for example, sectors dependent on overseas travellers such as the aviation/travel sectors and hospitality businesses in our major cities,” PwC said.

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“The extension of this vital support will allow all businesses to continue to focus on employment restoration while finding their feet and dealing with other creditors – many of whom are struggling SMEs and private landlords – without the additional pressure of an early removal of the support from the State,” it said.

In its submission, it also called for the extension of several other measures aimed at helping struggling businesses, including tax debt warehousing to the of end 2022 and an extension of the 9 per cent VAT rate for the hospitality sector until the end of 2023.

"The Government should be commended for the various supports that it has given to businesses from the very start of the pandemic, particularly in the sectors hardest hit including Ireland's SMEs and private businesses," Nicola Quinn, tax partner with PwC Ireland, said.

“Despite concerns about new virus strains and the very recent further delay in the reopening of the hospitality sector, there is optimism that economic activity will bounce back. However, this will be unevenly spread, with a growing fear amongst private businesses that the contingency funds and support measures will be largely exhausted as we head into 2022 and beyond,” she said.

“Therefore, particular attention will still be needed to continue to support our private businesses, employing some 45 per cent of people working in Ireland. It would be very disappointing to see successful businesses fail just before they have had the chance to trade again. Now more than ever we need to continue to support businesses through a new stage of recovery and renewal.

Separately, Social Justice Ireland has called on the Government to adopt a minimum effective rate of corporation tax of at least 10 per cent.

In a pre-budget submission, the advocacy group said Ireland’s headline 12.5 per cent rate has been the subject of increasing controversy in recent years.

“This is not so much because it is low, but because the effective rate [the rate actually paid by corporations after taking into account tax breaks] that some large firms is considerably lower,” it said.

The group’s budgetary package included €4.5 billion in spending on housing, which it said could be paid for through several additional revenue-raising measures, including the minimum effective corporate rate and a standard rate for pension-related tax reliefs.