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Price-gouging hotels should pay full rate of VAT, Fine Gael party is told

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Tánaiste Leo Varadkar

Tánaiste Leo Varadkar

Dublin Rathdown TD Neale Richmond said tax cuts amounting to €5 a month would not be enough. Photo by Steve Humphreys

Dublin Rathdown TD Neale Richmond said tax cuts amounting to €5 a month would not be enough. Photo by Steve Humphreys

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Tánaiste Leo Varadkar

The 9pc VAT rate should be increased for price-gouging hotels, and new tax breaks should be introduced for people who want to renovate vacant houses, the Fine Gael parliamentary party has heard.

It comes as concerns were raised in the party over the lack of participation in meetings by parliamentary party members, as disillusionment grows within the organisation.

One senior party TD said: “It’s very telling that TDs and senators are not showing up to meetings and are more concerned with attending local events so as to keep their seat.”

Another source said: “If Leo doesn’t put a Fine Gael stamp on this budget, it could be the end of the line for him.”

The Fine Gael parliamentary party held a lengthy discussion on budget priorities on Tuesday, which saw members outline a range of demands ahead of the announcement in October.

Backbenchers called on the party leadership to introduce a budget which will focus on tax cuts for middle-income earners, who pay a significant amount of tax but feel they get little in return.

Dublin Rathdown TD Neale Richmond said tax cuts amounting to €5 a month would not be enough in the forthcoming budget. He urged Finance Minister Paschal Donohoe to ensure more could be done for the squeezed middle, who feel they pay for everything but get nothing in return.

Former cabinet minister Michael Ring said more should be done for working people, who hand over a large amount of their salaries in tax through USC and PRSI.

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Dublin Rathdown TD Neale Richmond said tax cuts amounting to €5 a month would not be enough. Photo by Steve Humphreys

Dublin Rathdown TD Neale Richmond said tax cuts amounting to €5 a month would not be enough. Photo by Steve Humphreys

Dublin Rathdown TD Neale Richmond said tax cuts amounting to €5 a month would not be enough. Photo by Steve Humphreys

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Mr Ring also raised the issue of the rising cost of private transport, due to record diesel and petrol prices.

Meanwhile, former agriculture minister Michael Creed called for more grants and tax breaks for people seeking to renovate derelict properties in rural communities.

Fine Gael senator Martin Conway said Dublin hotels are price-gouging customers and should be forced to pay the full rate of VAT. He said the cost of hotels in Dublin is “astronomical” and called on Mr Donohoe to act.

In the wake of the lockdowns caused by the Covid-19 pandemic, the Government reduced VAT on the hospitality industry from 13.5pc to 9pc.

Tánaiste Leo Varadkar also insisted he is still pursuing his objective of introducing a third rate of tax for middle-income earners.

Mr Varadkar said it is unfair that the average working person earns more than €40,000 but stands to lose 52pc of any pay increase they get – through income tax, USC and PRSI.

The debate comes at a time of growing unease within Fine Gael as the party’s popularity continues to plummet.

“We’re at 19pc, and something drastic needs to be done,” said one TD.

Another senior party figure said: “Everyone in Fine Gael flinches every time Paschal Donohoe goes on radio, because of all the doom and gloom he spouts.”

Meanwhile, Fianna Fáil’s parliamentary party has been given a briefing on the state of the economy by the Taoiseach’s economic adviser, Alan Ahearne.

Mr Ahearne warned the financial outlook for the country is “highly uncertain” and said there are an array of potential issues coming down the line in the winter months.

However, he said the country is in a strong position economically to withstand the pressures caused by record levels of inflation and insisted the public finances are in good shape.

He said there is a strong case for a "rainy day fund” to be introduced, due to concerns over the sustainability of corporation tax revenue.

He said the lessons of the 1970s should be looked at, and insisted chasing inflation will not properly address the crisis, but would worsen it.

However he said targeted measures were needed to help ease the burden of the cost-of-living crisis for those who most need State support.



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