Taoiseach Leo Varadkar has said that the Government will consider new cost of living supports this month to help thousands struggling amid the crisis.
Mr Varadkar said that while that “no decision has been made on the matter”, inflation will not be under control by February and that the Government will have to interact, reports the Irish Mirror. The Fine Gael leader also hinted that it is “legally possible” for the Government to extend reduced VAT to restaurants but not to hotels.
Hotels have regularly been accused of “price gouging” since the VAT rate dropped from 13.5% to 9% in recent months. The Government introduced several measures in The Budget in a bid to tackle the cost of living, which included the introduction of €200 energy credits for households.
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Businesses were also assisted through the Temporary Business Energy Support Scheme (TBESS) and VAT cuts for hospitality. Speaking last week, Mr Varadkar acknowledged that these cost of living supports will stop from February, and that the situation will be assessed by the Government at the end of January.
Mr Varadkar said: “I'm also very aware that at the end of February, there is a bit of a cliff edge. The energy credits run out, VAT is supposed to go back up on hospitality, electricity and gas, excise is due to go up on petrol and diesel and the TBESS to help businesses is due to end.
“It's fair to say that we can't have that kind of cliff edge happen at the end of February. We’re not going to have inflation and the cost of living under control by then. Certainly, by the end of January or early February, the Government will have to give consideration as to what we can do in the spring to help people with the cost of living.”
The Taoiseach also warned that the Government will not be able to afford to extend all of the measures that are currently in place. He said: “Where we’re not continuing with a certain measure, are there alternative more targeted measures that we could put in place? I think we’d need to be able to give people certainty and visibility around that, not at the last minute in February, rather at the end of January or early February."
When asked if hotels that have been accused of "price gouging" could be subjected to the higher 13.5% rate of VAT from the end of February while continuing to apply the lower 9% rate to restaurants, Mr Varadkar acknowledged that due to changes in the VAT directive, it is now “legally possible” to charge different VAT rates.
He added: “Just because it’s possible legally doesn’t mean that we’ll do it. But it’s an option that we can consider as part of the mix."
The Government announced last year that it would place a cap on excess revenues earned by energy companies. It is expected that this money could go towards additional cost of living supports.
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