Leo Varadkar: Shops decide whether to pass on VAT cut

Leo Varadkar: Shops decide whether to pass on VAT cut
Tánaiste Leo Varadkar defended the Government's rebate holiday scheme. Picture: Leah Farrell / RollingNews.ie

Shops and businesses can decide whether or not they pass on the new VAT cut to customers, Tanaiste Leo Varadkar has said.

His remarks come after the launch of the Government's Covid-19 stimulus package, designed inject cash into the economy and protect jobs.

Mr Varadkar said that individual stores or retailers could decide if they would pass on the 2% VAT cut for goods purchased, as he defended the stimulus plan.

The plan includes €5.4bn of funds, including an extension of pandemic payments and supports, money for training, business grants as well as aid for retrofitting and a spend rebate scheme.

Mr Varadkar also told Newstalk that a holiday voucher over the tax rebate scheme would not work in Ireland. Under the rebate plan, customers can reclaim up to €125 for spending €625, either in hotels, restaurants or in hospitality and between October and April.

Sinn Féin has criticised the July stimulus package - calling it miserly-and saying people who do not pay tax will not benefit from the tax rebate.

But Mr Varadkar said: "Anyone who pays income tax or USC will benefit from this scheme - so that's 2.3, 2.4 million people.

"It will be simple: you just take a picture of the receipt on your phone, and you can sent it via an app to the Revenue Commissioners and you'll get the rebate in the next tax year.” But the voucher scheme would not have worked, he said.

It would certainly take a while to get up and running. It would be expensive to administer, you'd see some people not getting the voucher.

Earlier, Taoiseach Micheál Martin defended the July stimulus plan, telling RTÉ it was a significant and powerful stimulus designed to ensure companies can stay intact and get through the coming months.

The extension of the Temporary Wage Subsidy Scheme and the PUP were the key planks of the scheme and combined with commercial rates relief, grants initiative and a reduction in VAT would give businesses “more than a fighting chance", he said, adding:

”The plan will give hope and confidence and a degree of certainty to businesses who have shown they are committed to staying in business. The Government will work to keep the fabric of the Irish economy intact over the coming months," he added.

“This plan will work and it’s designed to be brought in immediately, but the Government will continue to oversee it.” 

When asked about the stay and spend tax credit, Mr Martin said the primary purpose of it was to support the hospitality sector. 

“We want to do it with speed, that's why this particular model has been chosen.”   

On the decision to delay the reopening of pubs, he said: “This sent a strong message to the public that we can’t be complacent about this virus.” 

Mr Martin denied the suggestion that his leadership had weakened in the first few weeks of the new Government because of internal wranglings in Fianna Fáil. He was focused on the substance of government, he said. 

Mr Martin said he was ignoring “the soap opera of politics” and was instead focused on policy and substance.

The most important thing he could do as Taoiseach was to keep his "eye on the ball".

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