Tánaiste Leo Varadkar has said the Stay and Spend tax rebate in the Government's July stimulus plan is "designed to get people to spend".
He also said there has been a huge increase in the amount of money people are saving at the moment.
Speaking on RTÉ's Today with Sarah McInerney, Mr Varadkar said despite so many losing their jobs during the pandemic, there are "millions of people who have not seen their incomes go down" and are making savings.
Mr Varadkar: "If we can get people to spend money, that will help get money back into the economy."
The Government yesterday agreed a €5bn package of 50 new measures to boost economic recovery and get people back to work.
The Stay and Spend tax rebate worth up to €125 per person is to assist the tourism sector in the off-season based on a spend of €625 is also included.
Mr Varadkar said the rebate is ultimately about getting those who have lost their jobs back to work.
He said: "This isn't targeted at people who haven't seen their payments reduced. This is targeted at those who have lost their jobs. It is not about the person sitting in the restaurant; it is about the person who used to work in the restaurant.
"This is designed to get people spending, so more of those people on the Pandemic Payment can get back to work."
Meanwhile, Sinn Féin has described the July stimulus package as a "big missed opportunity" which does not deal with the "quantum of the problems in the tourism and hospitality".
Speaking on RTÉ's Morning Ireland, Sinn Féin's Finance spokesperson Pearse Doherty said "we needed more ambition" and for the plan to be more targeted and fair.
Mr Doherty criticised the "staycation" proposal as very cumbersome and excludes a million workers, carers and the unemployed.
He said if you go to a restaurant in October, the State is subsidising one table by 20% and giving nothing to another table and the one not being supported is the low income table and the person who needs a break.
He also said the Government's €300m in grant aid is "paltry" and excludes sole traders and the reduction on VAT should have specifically targeted the tourism and hospitality sectors and should have been cut to 9%.
Mr Doherty said that this would have paid for itself by the end of the year by getting people back to work and off the Pandemic Unemployment Payment.
"We have a ridiculous situation" where you could go into a restaurant in October to see two identical meals served to two tables, with the State subsidising one by 20% while the other gets no support, because they're low-income, Sinn Féin's @PearseDoherty tells @MorningIreland pic.twitter.com/q0vwm2ltJv— RTÉ News (@rtenews) July 24, 2020
Mr Varadkar explained why a voucher scheme as suggested by Sinn Féin would not work, saying that with PPS numbers they could run the risk of giving vouchers to those who do not live here anymore.
Mr Varadkar said: "If you went for a voucher system you would find yourself in something pretty chaotic quite soon. Take for example the electoral register for example; everyone knows how inaccurate that is. So that Sinn Féin idea has not been properly thought through."
With the stimulus package, he said there are also a huge amount of opportunities to retrain for those who cannot go back to their current jobs.
Green Party leader Eamon Ryan said the Government's stimulus package is an attempt to protect workers, saying a "huge amount" is going to the Temporary Wage Subsidy Scheme and also by extending the Pandemic Unemployment Payment until April.
Mr Ryan said: "What we are doing is borrowing to avoid people running into hardship. There has never been such an input of money to try to protect workers."
He said reskilling programmes are also an integral part of the stimulus package as a chance to create new jobs "and that is a responsible approach that this government is taking".
The Taoiseach said the July stimulus plan is a significant and powerful stimulus and is designed to ensure companies can stay intact and get through the coming months.
Taoiseach @MichealMartinTD tells @MorningIreland the primary purpose of the Stay and Spend incentive is to support the hospitality sector, rejecting criticism from @PearseDoherty that it is unfair to lower-paid people | https://t.co/pLW8kG9Rqy pic.twitter.com/XV28BZLQqj— RTÉ News (@rtenews) July 24, 2020
Micheál Martin said the Temporary Wage Subsidy Scheme will support the tourism and hospitality sector and agreed that doing so acknowledges that "normality will not return" before the spring.
He said the PUP will be phased out over a longer term with significant funding to do so, but this will allow people to reorientate towards jobs in different sectors and the October Budget will review the situation further.
Mr Martin said that Mr Doherty's "very negative sloganeering outburst" focuses on one element of the package, ignoring the labour activation measures and the job support and reskilling initiatives.
He said the Government want to create jobs in new areas and support people who have lost jobs to adapt and re-skill and get jobs in sectors that are thriving, such as the digital sector and in retrofitting.
Taoiseach @MichealMartinTD agrees on @MorningIreland that the extension of the PUP and the Wage Subsidy Scheme to the end of March 2021 is an acknowledgement that the economic fallout of the #Covid19 pandemic will be with us until at least that time | https://t.co/pLW8kG9Rqy pic.twitter.com/IpXm8MF7yj— RTÉ News (@rtenews) July 24, 2020
Mr Martin added that the Government is looking at sectors where new jobs can be created such as in bog redevelopment and in developing new cycle routes and greenways.
He said the minor capital works scheme doubled for every school in the country will reach into the regions and make sure there is enough cash around to keep people at work.