Leo warns tax cuts will end as cost of living increases
TAOISEACH Leo Varadkar warned that temporary tax breaks will come to an end and said living costs will continue to rise.
The Cabinet will sign off on new supports on Tuesday but people have been warned to prepare for some State aid measures to be withdrawn.
Speaking in Limerick yesterday, Mr Varadkar said that temporary tax supports introduced to ease the cost-of-living crisis cannot all be maintained.
He said: ‘Inflation is now slowing down but the cost of living remains very high and is still getting higher, and that is putting a lot of people and families and businesses under pressure and we want to help.’
Mr Varadkar said the Government will not be able to make the same level of financial intervention as in the budget and the measures would be more targeted.
The Taoiseach added: ‘The package will all be about helping businesses with their energy costs, it will be about helping families who are really struggling with the cost of living, and it will also be about helping the people most vulnerable in society – those on fixed incomes, pensioners, people on social welfare who need a little bit of extra help.’
This paper reported yesterday that there will be one universal measure included in the package, either a universal energy credit – at a cost of €400million – or a double child benefit payment.
The Temporary Business Emergency Support Scheme, which was introduced to support businesses with increases in their electricity or gas costs, is also set to be repurposed.
The scheme was announced in the budget and had an allocation of €1.2billion, but just €26million has been drawn down so far, with businesses saying the complexity of the application process made it not fit for purpose.
Mr Varadkar added yesterday: ‘I need to be frank with people as well: this is not going to be a budget or mini budget. The €11billion we deployed in the last budget – that’s only a few months ago – those measures are still being rolled out and the temporary tax cuts that were put in place are temporary and they will need to be phased out over the course of the year, and we will be setting out how that is to be done.
‘There are a lot of things that people haven’t yet seen. The energy credit for March and April hasn’t yet come off your bill. The student fees are still going down, for example, going into next year.’
The Government will gain some more fiscal space to use funds from the proceeds of the windfall tax in the coming months.
In November, Energy Minister Eamon Ryan said the Government could take in between €340million and €1.9billion through a windfall tax on energy providers.
The Government has insisted this will be used to ease the cost of energy for the most vulnerable.
Finance Minister Michael McGrath told RTÉ News that the Government is ‘giving consideration’ to phasing out measures that are due to expire in law at the end of the month.
The Irish Hotels Federation wrote to the three Government party leaders yesterday urging them to retain the 9% tourism VAT rate. However, the Government is not set to retain the lower VAT rate for hospitality, as revealed by the Irish Daily Mail.
‘This is not a budget or a mini-budget’