The tourism industry faces the prospect of higher taxes to ensure families are financially supported during the cost-of-living crisis.
Senior ministers will meet next week to consider whether VAT on the tourism and hospitality industry should be reduced back to 13.5 per cent, reports Independent.
The move aims to help ensure there are financial resources to provide more support to households struggling to pay bills.
It comes as a number of cost-of-living supports are due to expire on February 28, leaving the Cabinet with big decisions to make in the coming days.
The Government will this week examine the best strategy to save families and businesses by examining a range of measures including:
– An additional €200 energy credit for the electricity bill.
– A double payment of the monthly child benefit.
– A double payment of weekly benefits such as state pension, unemployment benefit and disability benefit.
– Extending the criteria for the fuel flat rate or awarding a double payment.
– A double weekly payment of the lone living allowance.
Expansion of operational energy subsidies.
The coalition is committed to tackling record inflation with a dual approach of a universal payment to all households, along with targeted measures for the most vulnerable.
Senior government sources say the tourism industry may have to suffer to ensure resources are available, reports Indepednent.
This could mean that the 9 percent rate for the sector returns to the 13.5 percent rate that applied before the Covid-19 pandemic.
There is some debate as to whether separate VAT rates could be applied to accommodation and food in the tourism industry.
This could mean that hotels are charged the higher rate for rooms but pay the lower rate in their restaurants and bars.
It would also allow the government to keep the rest of the hospitality sector at the 9 percent rate.
Meanwhile, there are countermeasures from the Green Party over Fianna Fáil and Fine Gael’s plans to maintain excise duty cuts on petrol and diesel beyond the deadline.
It now looks like the government will phase out excise duty cuts, which cut a liter of petrol by 20 cents and diesel by 16 cents, by the budget.
The move is presented as a big win by the Greens but is likely to anger backbench TDs of Fianna Fáil and Fine Gael.
“Politically it’s not a great move as it’s no good telling a constituent that we only increase excise on diesel by 5pc – it’s all or nothing really,” a minister said, reports Independent.
Another doubling of the monthly child benefit amount as recognition of childcare costs is being considered.
Double payment of social benefits, although very costly, is also being discussed at the highest level of government.
Senior sources in all three ruling parties said they were open to paying child support twice, but there were concerns about the funds being enough.
“We are mindful to do it but there is a finite amount of money to do things like that and it is a very expensive move,” one source said, reports Independent.
Some senior ministers believe that introducing another energy credit is the easiest way to provide a universal measure to help people. Others believe the energy loans should be deferred and paid next winter.
Tell us your thoughts in the Facebook post and share this with your friends.