Government looking at energy tax cuts, welfare increases, and higher tax reliefs

Finance Minister Paschal Donohoe. Picture: Moya Nolan

Tackling energy costs, increasing welfare benefits, and examining tax reliefs are the main measures being examined to reduce cost-of-living pressures on people, Finance Minister Paschal Donohoe has said.

In an interview with the Irish Examiner, Mr Donohoe said work is under way in identifying further options to help ease the pressures families are currently facing.

He said: “So what can you do? The levers are there. It is what you do with the price of energy and what the State adds to the cost of energy through the PSO and how you can reduce it, as we’re going to do in this quarter.

“And then it is what you do with your tax code and your social welfare code. 

There are a number of levers that can make a big difference. But in using those levers, the cost of it is high.”

A major package worth hundreds of millions of euro aimed at relieving cost-of-living pressures of families is being developed by Cabinet.

The Government is examining ways to temporarily waive the costs imposed by the State on the public, including so-called nuisance costs.

The finalised plan will be announced within two weeks.

The plan will go to a Cabinet sub-committee next Thursday, but while there is a desire to ease the burden, there is also a concern that measures introduced could further increase inflationary pressures.

Following a number of meetings involving the three Government party leaders in recent weeks, Public Expenditure Minister Michael McGrath and Mr Donohoe have been tasked with bringing forward the plan.

Public Expenditure Minister Michael McGrath. Picture: Sam Boal / RollingNews.ie

Mr McGrath made clear to a private Fianna Fáil meeting that the departments of Transport, Education, Health, and Social Protection have all been asked to identify potential measures which could ease costs on the public.

Among the most likely measures to feature is a possible doubling of the €100 energy credit off all electricity bills, while many health-related charges such as A&E fees, prescription charges, and the drugs payment scheme could be waived for a period.

It has been mooted that a possible waiver on road taxes and toll charges was likely to feature, but this has been rejected as unacceptable by the Green Party.

Tánaiste Leo Varadkar told the Dáil that the three Coalition leaders met on Monday, and had told line ministers to come back with proposals to help tackle rising costs.

He was speaking in response to Sinn Féin deputy leader Pearse Doherty who said that “workers and families are under pressure like never before” due to climbing costs of fuel, energy, and food. 

He said that in the 12 months to December, inflation hit 20-year highs, childcare is a “second mortgage”, oil prices are up 53%, and rents “continued to spiral”.

Mr Varadkar is to chair a committee meeting of the Cabinet Economic Committee to discuss the package of proposals.

“We will make a decision on it," he said. 

And we’ll make it soon, certainly in the next couple of weeks, because we do acknowledge that the cost of living is rising.”

Government sources said that a range of measures will be looked at in advance of next week’s subcommittee meeting.

These include a potential increase in the amount companies can pay staff in bonuses tax-free from €500 to €1,000, a dedicated hardship fund for people struggling to pay bills, and cuts to Vat on food, fuel, or energy.

However, a senior source said that nothing concrete has been decided, and the Government will have to be aware of EU state aid rules and will focus only on the “pinch points” affecting consumers.