Leo warned of ‘tsunami’ of closures over tax debt
TAOISEACH Leo Varadkar has been warned by his own party he faces a ‘tsunami’ of small business closures if the Government does not relax or delay the repayment of debts warehoused during the Covid pandemic.
The Fine Gael leader was also told the party could lose many of its traditional voters to Sinn Féin following a recent spike in hospitality business closures.
Finance Minister Michael McGrath this week said the Government will introduce flexibility to the tax debt warehousing scheme, which allowed businesses to ‘warehouse’ certain tax debts during the pandemic. However, there are divisions within Cabinet about the kind of measures needed to ease pressure on small businesses fighting for their survival.
A senior Fine Gael figure told the Irish Mail on Sunday: ‘The party is ready to revolt over the treatment of small restaurants and pubs. Every member spoke about it at a special meeting this week, and he [the Taoiseach] was bluntly warned to sort it out.’
The primary concerns among small restaurants and bars are the looming deadline to start repaying warehoused tax debt, and the budget increase in VAT for hospitality businesses from 9% to 13.5%. Unease is especially high over the May deadline for the repayment of the tax debt.
Under a Government scheme, tax debt incorporating VAT, PAYErelated tax across income tax, PRSI and USC, and wage subsidy overpayments were warehoused during the pandemic.
However, from May, those with warehoused tax debt need to – at the very least – have 20% ready to pay back and a payment plan for the remaining 80%.
By the end of last summer over 60,000 businesses and 2,500 individuals owed a combined total of €1.9bn to Revenue in warehoused debt.