#Budget19: Tourism VAT increase approved, Donohoe defends carbon tax decision

The Justice Minister insists the increase in VAT in the hospitality sector will not "see the sky falling in".

#Budget19: Tourism VAT increase approved, Donohoe defends carbon tax decision

The Justice Minister insists the increase in VAT in the hospitality sector will not "see the sky falling in".

Just after midnight, the Dáil approved the measure announced in the budget yesterday.

The rate will increase from 9% to 13.5% on January 1st.

A number of TDs argued strongly against the move ahead of the vote.

Minister Charlie Flanagan told them, the impact of a rate increase had been independently assessed.

"Last year, the Minister for Finance at this precise time committed towards an impact assessment of reversion to the original VAT rate," said Minister Flanagan.

"We've seen that assessment. That assessment doesn't point to the sky falling in or the disaster for rural Ireland as has been mentioned by deputies."

Meanwhile, the government has defended not introducing a carbon tax in yesterday's budget.

The Finance Minister says he is open to increasing the carbon tax in future budgets.

The government has come under heavy criticism for removing the measure after pressure from some in Fine Gael.

It would have meant an increase in the cost of petrol, diesel and coal.

Paschal Donohoe says it is not a measure he could get support for this time around.

"I am open to, in 2019, trying to get agreement within the Dáil regarding a long-term approach to carbon pricing and I think it's indispensable that we have that long-term approach before we begin a sequence of moves and my judgement is that that consensus is not there at the moment," said Minister Donohoe.

Farmers have breathed a sigh of relief that the Government will not be increasing carbon taxes next year.

Laois farmer Francie Gorman said carbon taxes negatively impacted rural Ireland in particular and it was the last thing that struggling farmers need when they were trying to make ends meet.

“I know it might not be popular to say, particularly outside farming circles, because of climate change but carbon taxes are a cruel form of taxation on rural Ireland,” Mr Gorman said.

The minister announced the introduction of a pilot scheme for suckler farmers worth €20m which aims to encourage farmers to weigh their cows and calves.

Mr Donohoe also outlined details of increased funding of €22.7m for the Areas of Natural Constraint (ANC) agricultural grant scheme, bringing the total to €250m.

A suckler beef and sheep farmer from Ballinakill, Co Laois, Mr Gorman welcomed additional funding being made available to suckler farmers.

He said the sector was the most vital part of the beef industry and it only survived with the Government’s support.

“The €40 is a start, it’s a move in the right direction… but as it stands there isn’t a living in beef farming,” Mr Gorman said.

He added that without further support in the next couple of years he will have to consider leaving the beef sector.

Mr Gorman said the restoration of the ANC grant had to be welcomed but he said smaller farmers were disappointed that low cost finance had not been made available to help farmers finding it hard to get over the financial stress caused by the unexpected bad weather in the past year.

The Irish Farmers’ Association said Budget 2019 had acknowledged some of the income difficulties in farming but more needed to be done.

IFA President Joe Healy said the pilot scheme for suckler farmers was a recognition of the income crisis in the sector, but the level of funding was disappointing and more needed to be done to help sustain the suckler herd.

Mr Healy said the ANC funding, which reversed cuts imposed on the lowest income farmers in previous budgets, was a positive measure.

But he said that the €200 increase in the earned income tax credit to €1,350 does not go far enough.

“The Government continues to discriminate between employees and the self-employed in the income tax system,” Mr Healy said.

“It is simply not right that a farmer earning €16,500 will be paying €300 a year more in income tax than a PAYE employee next year.

“The Government has reneged on a clear commitment in the programme for Government that they would reach parity, of €1,650, by 2018”.

PA & Digital Desk

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