Prospect of tax cuts as part of cost-of-living package receding

The prospect of tax cuts as part of the Government’s cost-of-living package is receding ahead of key meetings this week.

Work to finalise the package is intensifying, with party leaders meeting Ministers from the economic departments yesterday ahead of Cabinet today and a key subcommittee meeting on Thursday.

A package to help households deal with mounting costs is expected this week. It had been mooted last week that tax cuts – especially to VAT – could form part of the package, but sources across Government downplayed this likelihood.

It is believed that European Union rules make it extremely difficult, if not impossible to do anything on VAT, and moves on taxation are seen as remote without the de facto introduction of a ‘mini budget’, something coalition leaders are keen to avoid.

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Yesterday evening, senior sources said there were still some moving parts to be nailed down. The Government is keen to target any new measures at low-income households who are more vulnerable to inflation. Measures could go through channels such as fuel allowance, living-alone allowance, qualified child payment or working-family payment.

Charges

There will be a focus on potentially reducing charges in the areas of transport and health, while an increased energy credit is also being examined.

Other moves which have not yet been ruled out include a longer fuel allowance season, beyond the current 28-week period. The allowance is worth €914 in total to those who can claim it.

Last night, Minister of State for Finance Seán Fleming sparked criticism by urging the public to shop around in areas such as electricity, insurance and grocery shopping. "It takes effort to shop and switch and if people make an effort they can save a lot of money," he told RTÉ. "So rather than just complaining and saying 'What's the Government going to do for me?', you could actually have a serious impact on your own finances."

Sinn Féin called his remarks “tone deaf”.

Mr Fleming apologised for his comments in a statement on Monday night: “I did not intend to imply people shouldn’t complain about the cost of living, that wasn’t my intention and for that I apologise,” he said.

“I was urging people to also shop around for best value, in addition to the measures being taken by the Government,” he said.

“The Government and Fianna Fáil take the issues around the cost of living very seriously. We are taking action to help ease the cost of living pressures many are currently facing,” he said.