‘Flexibility’ on EU VAT rules sought to ease energy prices rises, Varadkar says

The Government is looking for “more flexibility” in EU rules on VAT in order to alleviate energy price rises, the Tánaiste Leo Varadkar has said in Brussels today.

He said that EU leaders would discuss the possibility to relaxing the rules so that it could reduce Vat without having to introduce a higher rate in the future.

Mr Varadkar said that under current EU rules, if the Government reduced VAT on fuel temporarily, it would have to eventually put VAT back up to a higher rate. “So we’re looking for a bit more flexibility on that,” he said.

Mr Varadkar was speaking to the media in advance of a meeting of European People’s Party (EPP) leaders, the centre right group to which Fine Gael is affiliated, before today’s summit of EU leaders in Brussels.

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“We do anticipate there will be a fifth package of sanctions, possibly involving some energy actions against Russia,” Mr Varadkar said. “And obviously we need to see what else we can do to support Ukraine, both in it military response and also humanitarianly as well.”

“There’s been four sanctions package already and the fifth one may include listing some more people linked to the Putin government, and may involve energy measures as well, perhaps around not buying Russian oil and coal. But that can be a difficulty for some European countries that are dependent on energy from Russia in a way that Ireland is not.”

“And we need to bear in mind when imposing sanctions that any sanctions need to do more harm to Russia than to us.”

He said the fifth package could be done on Friday, but it could also be agreed later.

Mr Varadkar said that the Chief of Staff of the Defence Forces and the Minister for Defence Simon Coveney had advised that the Irish army did not have weapons that it could send to help the Ukrainian army. He said that anti-tank weapons help by the Defence Forces were needed for “training and peacekeeping”.

But he stressed that Ireland was contributing fully to EU financial support for Ukraine, and Irish funds were being used to buy supplies for the Ukrainian army, including “fuel and rations and body armour”. “They mightn’t be weapons but they do make a difference. You know an army marches on its stomach and they need armour and they need fuel and we’re providing that.

Asked if this was military assistance, Mr Varadkar said: “Technically, it’s not. It’s considered to be non-lethal assistance . . . But to me it is largely a technicality.”

Mr Varadkar said the Government was concerned about food security, but he did not anticipate that there would be “food shortages or rationing . . . That isn’t something that we anticipate, because we do produce so much food as a country. What may happen is that there will be less choice - that some products that are currently available may not be and I think we will see increases in the price of food.”