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New cost-of-living package will be last one before the next budget, says Finance Minister Michael McGrath

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Finance Minister Michael McGrath. Photo: Damien Storan/PA

Finance Minister Michael McGrath. Photo: Damien Storan/PA

Finance Minister Michael McGrath. Photo: Damien Storan/PA

The next cost of living package must be “affordable” and will be the last one before the next budget, Michael McGrath has said.

The finance minister told reporters in Brussels that a decision on whether to keep Vat at the lower rate of 9pc for the tourism and hospitality sector has “yet to be made”.

He also said he wants “to see inflation continue to fall”.

“We have to look at it in the round, about what the overall cost of the package is, to make sure that it is affordable for the country, that it represents the best and most efficient use of taxpayers money, and that it represents the final intervention before the next budget,” he said on his way into an EU finance ministers’ meeting on Tuesday morning.

A cabinet committee consisting of economy-focused ministers will meet Thursday to discuss the package, with a final decision not due before next week, Mr McGrath said.

The package may need to be put before the Dáil then.

“It’s important that we manage the resources of the country well and we do so in a carefully considered and a structured manner,” Mr McGrath said.

Mr McGrath and Public Expenditure Minister Paschal Donohoe met with tourism and hospitality representatives last night to discuss an extension of the 9pc Vat rate, which is due to expire at the end of the month.

The rate was reduced from 13.5pc during Covid to help the sectors worst hit by the lockdown.

“That’s a decision that has yet to be made,” Mr McGrath said of the 9pc rate.

“The decision that was made last year in the budget was that it would end at the end of February, along with a range of other measures.”

Other measures that expire at the end of the month include excise duty cuts that reduced a litre of petrol by 20c and diesel by 16c and the €1.2bn temporary business energy support scheme.

Ministers are also in talks about another €200 energy credit for households, a double payment of the monthly child benefit or other weekly welfare payments such as the state pension, jobseeker or disability allowances and expanding the criteria for the fuel allowance.

“We have a set of decision, including other taxation items, Vat on gas and electricity, household bills, also excise reductions on petrol and diesel, and the business energy support scheme,” said Mr McGrath.

“And there may be other proposals that government will wish to consider.”

Mr McGrath acknowledged the “pressure” on households and businesses and said the new measures would be confirmed "in the next week or so”.

Mr McGrath is in Brussels for a meeting with the EU’s 26 other finance ministers, where they are discussing Russia sanctions and an overhaul of the EU’s deficit and debt rules.

He said Ireland was “generally positively disposed” to changes to the budget rules that would see high-debt countries given more flexibility to pay down their debts over time. But he said he recognised that “there are concerns” among some member states about the changes.

France, Spain and other EU countries want more flexibility in the rules to make green investments, while Germany and other northern European countries are nervous about allowing states too much leeway.


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