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Dáil
‹ Ceisteanna ó Cheannairí - Leaders' Questions

Tax reliefs and support expiry

Summary

Deputy McGrath warns that households and businesses face a cliff edge unless the reduced VAT rate, TBESS and fuel excise cuts are extended, and seeks certainty. Ryan says these decisions cannot be made in Leaders' Questions, but argues the Government must balance support for the vulnerable, jobs and public services with a stable tax base.

The lack of clarity or any concrete commitment from the Government to extend the financial supports for businesses and households, as has just been discussed, and to mitigate the ongoing high cost-of-living crisis means people are now facing a cliff edge, which the Taoiseach said they would not face. The Government has also completely failed to provide on any clarity as to whether the reduced 9% VAT rate for electricity, gas, petrol and diesel will continue beyond 1 March. People need certainty.

The lack of clarity from the Government in this area is causing significant stress and anxiety for tens of thousands of people. Furthermore, the hospitality sector, which employs 260,000 people and whose season kicks off on 1 March, with bookings going on at the moment, is being left in limbo once again as the Government has made no decision on whether the VAT rate for the sector will continue on the temporary lower rate beyond 1 March. They need certainty. They need to fill rooms, take bookings and employ people.

Leaving such families, motorists, rural residents and the entire hospitality sector in a state of limbo in the middle of a catastrophic cost-of-living crisis is outrageous and underlines the wishy-washy nature of the Government. Ministers are in here defending the Minister, Deputy Donohoe, and dealing with everything bar what they should be dealing with. They are letting the big guys like Gresham House take over our country. Look after the daoine óga and daoine beaga, please.

The lack of clarity in this policy is incredible. It is clear the Government lacks any leadership here, or is it that the three parts are fighting with each other? I heard the Minister say on radio that he thought that excise duty on fuel would need to increase because the cost of fuel had come down. Does he really want to cripple motorists, hauliers and everybody else?

Inflation and the cost-of-living pressures affecting families are extremely harsh at the moment. Families and small businesses deserve to know what is happening. They will deal with it as best they can, but they deserve certainty. The Government's failure to provide clarity here is appalling. I know Government backbenchers are in agreement with what we are saying here, but the tail is wagging the dog because the Minister stated he wanted excise duty to increase again along with carbon tax and everything else. Earlier he said we should come down from the mountains and plant trees on good land. I say he should go back into the hills and stay there with the wolves and everybody else if he will not look after the people he was elected to look after. He can plant whatever trees he wants to plant in the wetlands and the wolves will keep him warm at night. However, they will not heat homes, provide food on the table or support the 260,000 jobs in the hospitality sector. Is the Government trying to wipe out that industry altogether?

We need decisive action. The Minister told Deputy Tóibín that there would not be a cliff edge and the Government would deal with it. When? It is only four and a half weeks until 1 March and what will we do then? Will we wait for another crisis?

Comment on this

At the end of July and in early August last summer when the price hikes really hit, my fear was that the impact would be far worse than the impact of Covid. That scale of price increase, which no one could predict would continue or otherwise, would be devastating for Irish business. Even though prices have come down dramatically since that spike, it has been very challenging for many businesses. That is why we introduced the temporary business energy support scheme, TBESS, one of the other measures that was introduced as part of the range of different solutions to the problem - I did not mention it to Deputy Tóibín. It has been surprising, we need to look at the real reasons, that the uptake has been much lower than expected. We will look at that as part of the review of the range of measures.

No one knows for certain what is happening with energy prices; it depends on the war. Five or six weeks ago I believe I said publicly that I expected gas prices to remain at their very high level for the next two years. That was the best advice from the International Energy Agency and the European Commission and any analysis available to me. It has changed in the past five or six weeks for a variety of reasons. Europe has not used as much gas. The stores in Europe are nearly 80% full, whereas this time last year they would have been down at about 30%. We are going into this refilling season in spring and summer. It has also been a slightly warmer winter than average. For that and other reasons, the price of gas has come down very significantly from what it was five or six weeks ago. That will not kick into home bills for some time. It will depend because each supply company has different circumstances in terms of how far forward they are hedged. Some might even be hedged a year in advance. They might have bought gas at very expensive prices last summer and autumn and consequently would have very high price points into this year and up to the end of the year. Others may not have hedged their position and may be able to bring their prices down quickly. There are about 13 different supply companies, all of which have different circumstances. However, we want to bring that down.

The Deputy will recall the highest price of petrol and diesel was about €2.15 a litre.

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Half of that was tax.

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However, that was the price people were paying at the forecourt, which is what matters to people. It is slightly different between gas and petrol, but the price has come done to about €1.50, so it has changed

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It is €1.67.

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It is complicated because the euro to dollar exchange rate affects the price as well as the price of oil. The price of oil has been relatively steady at about $80 a barrel on the international markets. In those circumstances we need to consider restoring our tax base. The benefit of excise and VAT is that they help to provide a stable income which allows us to pay for the public service pay increases we need to deliver. They allow us to provide for social welfare increases and go further in October's budget. I could outline a long list of what we need spend money on. There is a responsibility to retain the income stream to pay for those vital services for our people.

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We all know what the Government spends it on, but driving people into penury is not the answer. While the Minister will not acknowledge it, it is not complicated to calculate the amount of tax the Government takes for each litre of petrol and diesel. It is as simple as that.

Will the Minister to confirm to the Dáil today whether the 9% VAT rate for the hospitality sector, the temporary business energy support scheme, TBESS, which he mentioned, and the excise cut for petrol and diesel will be extended beyond the end of February? That is a simple question. People need certainty. The 260,000 people employed in the hospitality sector and their employers need certainty.

The Minister referred to a slow uptake of the TBESS; it is confined to electricity. I have been contacted by people using oil or gas other than town gas and could not get the TBESS. The Government is making it tricky. The Minister is making it sound as if people did not need or want it. These are the games he is playing with people's lives.

The public deserves a government that will provide certainty. It appears we will not get certainty and rather it will be day after day and issue after issue. People need clarity and certainty that they will be able to heat their homes and go to work. Industry, farms and everybody else who depends on these measures need to know they will continue and they will have certainty.

Comment on this

We will not be able to decide that on Leaders' Questions on Thursday, 26 January.

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It is a great con.

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We need to do that collectively as a Government, taking into account a variety of circumstances, recognising that while prices have come down very significantly, they are still very high by historical comparison. In our economy we need to ensure the overall economic approach protects the most vulnerable, retains employment and helps businesses because some businesses are still in particular difficulties.

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The Government taxes the working class and the squeezed middle.

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We need to try to ensure we have an economy that serves our people. That is the purpose of our economic policy.

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Gresham House.

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The income streams that come from a stable tax base are part of a social democratic approach Government.

It is so easy to make promises where you will not have to pay for anything-----

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I did not say that.

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-----and we will provide for everything. There is a responsibility to balance income and expenditure.

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We need certainty.

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The State needs to expand. We need more services, houses and hospitals. We need to pay for them by creating a sound economy.

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