The Government is developing a staycation subsidy as part of a set of measures aimed at reviving the tourism industry.
Holidaymakers will be able to reclaim part of their hotel and restaur- ant bills under the plan, which may be a central element of next week's July Stimulus Package.
The tax rebate scheme is aimed at encouraging people to eat out and holiday in Ireland in the wake of the Covid-19 pandemic.
The exact rate of the rebate and how it will be administered is still being finalised.
The Government had considered giving people vouchers to spend in hotels and restaurants, but decided against this over fears it would lead to price hikes.
VAT cuts were also on the table, but are now unlikely to feature in the economic package, which is being described as a mini budget, as it will not be passed on to customers.
It is hoped the tax rebate would encourage customers to shop locally, get back to work and put money in people's pockets.
A similar scheme was introduce by UK chancellor Rishi Sunak as part of Britain's econ- omic recovery plan.
His "Eat Out to Help Out" scheme sees the government pay up to 50pc of a person's restaurant meal up to £10. A family of four could save £40 on a meal costing £80.
The Irish scheme is expected to focus on hotels and restaur- ants, but it is unclear if pubs will be included.
An important part of the package will be encouraging people to shop locally and take staycations.
The Government is also working on a scheme to create jobs in communities that have been impacted. It also expected to expand the Town and Village Renewal Scheme to encourage more local business.
A cross-party Dail committee has called for bigger grants to help pandemic-hit businesses, an extension to the Temporary Wage Subsidy Scheme (TWSS) and the possibility of vouchers for the hospitality sector to form part of a stimulus package.
The Dail's Special Committee on Covid-19 Response published a report that includes 19 recommendations aimed at boosting the economy.
These include changing the Restart Grant Scheme to increase the average value of the grants and to make it available to more businesses.
The committee also says the Government must ensure the TWSS remains available to firms that will operate below capacity due to Covid-19 and that "any tapering off of supports should have a significant lead-in time".
The report says the Government should "examine the feasibility and benefits of a voucher scheme for all residents, to be spent supporting the domestic tourism sector".
Tanaiste and Enter- prise Minister Leo Varadkar poured cold water on suggestions that such a voucher scheme, as proposed by Sinn Fein, should be included in the July stimulus.
He questioned how effective it would be in helping businesses that remain closed or restricted.
The report also recommends that consideration should be given to the costs and benefits of reducing the VAT rate in the tourism and hospitality sectors.
It says the Government should increase the availability of apprenticeship schemes to reduce youth unemployment and increase the skills level in the labour force.
Meanwhile, Foreign Affairs Minister Simon Coveney has confirmed that the US will not be on the green list for safe travel to Ireland, and the UK is unlikely to be included.
Currently, people travelling to Ireland from other countries are required to self-quarantine.
They also have to fill in a passenger locator form, which says where they have come from and where they will be self-isolating.
The green list is due to be published on Monday.