Varadkar does not rule out interim measures to offset inflation before October Budget

Interim measures to combat the cost of living before October’s Budget have not been categorically ruled out by the Government, Tánaiste Leo Varadkar has said.

“We are planning to take more action to help people with the cost of living and that will happen on Budget Day, which is just over three months away,” he said.

“We are not ruling out doing anything in the interim, but we’ve nothing specifically planned,” he added.

The Tánaiste framed interim measures as a possibility only in the context of inflation continuing to increase dramatically during the summer months.

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Asked if he was concerned if the measures already introduced would be outstripped by increases in the cost of living, Mr Varadkar said nobody had expected inflation to rise as fast as it has done.

“That is why we keep monitoring this as a dynamic situation and that’s why I’m not ruling out interim measures. Certainly there are none planned at the moment.”

Mr Varadkar was responding to calls from Opposition TDs for Government action in wake of the publication of a report by the Economic and Social Research Institute (ESRI) on the cost of living.

The Tánaiste accepted that the report was “very stark”.

“I don’t think it’s surprising. I don’t think there’s all that much new information there. Everyone knows the extent to which the price of petrol and diesel has gone up, and home heating oil. Anyone that looks at their utility bill can see how much the price of electricity and gas has gone up.

“So the Government is very much aware that people are feeling the pinch and some families in particular, are really struggling and you know.

“That’s why we have intervened, a billion euro in the Budget, only in January, to increase pensions, welfare, reduce income taxes for working people, and since then another €1.4 billion in measures that were universal and targeted, an increase in fuel allowance for people on the lowest incomes and the reductions in excise on diesel and petrol and the €200 off the electricity bill which benefited everyone.”

The Tánaiste was reminded of the effort of the Government earlier this year to persuade the EC Commission to allow the State to reduce VAT to lower levels and asked if there had been any outcome from those talks.

“We have a system of minimum taxes across the European Union,” he said. “They exist for a very good reason to make sure that we don’t have huge numbers of people crossing borders to avoid taxation. We have a set of minimum taxation measures. They make sense because they stopped the taxpayers being hollowed out.

“My understanding is that we’ve gone as low as we can go on petrol and diesel excise and that is evidenced by the fact that our prices are similar or lower than in other western European countries at the moment when it comes to petrol and diesel.

“And on VAT, we did get a derogation, we did reduce the VAT rate on electricity and gas down to 9 per cent. That’s the lowest it’s ever been. We only did that a few months ago,” he said.

When asked if it could be reduced further he said that would need agreement from all 27 EU Member States. “These are really complicated directives. I did speak to (Minister for Finance) Paschal Donohoe about it last night. My understanding is that we’re now at, or close to, the minimum excise on petrol and diesel.”