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Magic money's hard to find - and middle classes don't need it

Colm McCarthy


The measures are good news for German car-makers, French wineries and Dubliners who can afford to pay for their own holiday, writes Colm McCarthy

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Minister for Finance Paschal Donohoe arrives at Dublin Castle for a Cabinet meeting on Tuesday. Photo: PA

Minister for Finance Paschal Donohoe arrives at Dublin Castle for a Cabinet meeting on Tuesday. Photo: PA

PA

Minister for Finance Paschal Donohoe arrives at Dublin Castle for a Cabinet meeting on Tuesday. Photo: PA

LAST Thursday's July Measures, the latest instalment in the Government's response to the Covid downturn, comprise mainly time extensions to schemes already in place. The crisis is not V-shaped, is not going away and the time extensions make sense.

The significant new measures, operative from September, are the two-point reduction in the 23pc VAT rate, the €125 rebate for taxpayers who spend €625 in Ireland on accommodation or food, a credit guarantee scheme and a laundry list of capital projects adding up to €500m.

The 23pc rate is the most important of the six rates operative in Ireland - just over half of all sales by value are taxed at this highest rate, and it gathers around 70pc of all VAT revenue. Unfortunately for a jobs stimulus package, it is in large degree a tax on imports. The items covered include cars, petrol and diesel, Champagne, audio-visual equipment, car parts and accessories, computers, cosmetics, fridges, jewellery, machinery, office equipment, tobacco and kitchen appliances. We do not make cars in Ireland and we do not make TV sets. There are people growing all sorts of strange stuff in remote locations on which VAT cannot readily be levied but we do not grow tobacco. We do not produce petrol or diesel either - indeed, you can no longer get a licence to drill for the stuff.