Varadkar backs windfall tax on energy companies but warns of unintended consequences

Varadkar backs windfall tax on energy companies but warns of unintended consequences

Tánaiste Leo Varadkar said he supports the levying of a windfall tax on energy companies — but that it should only be applied on windfall profits. 

Tánaiste Leo Varadkar has said a windfall tax should be levied on energy companies but that care must be taken not to do unintended damage.

He said the Government should give consideration to a tax on windfall profits.

“But we need to be very careful to make sure that if there is a windfall tax, that is on the windfall element of the profits,” he said.

“Bear in mind, what happens with regular profits of an energy company comes to the State, and we use that to invest in housing and healthcare and education, everything else, and it gets reinvested in the grid renewables.

So any time you introduce a new tax or windfall tax, you need to be aware of the unintended consequences. If it's a tax on the windfall, that makes sense. 

He noted, though, that if such a tax was applied to regular profits, there's a risk of taking companies away from investing in the grid, in new generation, and in renewables. 

“That will be a short-term fix that actually creates a long-term problem,” he said.

He said it is important to acknowledge that the increasing price of energy is driven by international costs.

Speaking in Roscommon, Mr Varadkar also said it is important that the voices of transgender athletes are listened to in any debate about their participation in women’s sport.

He was referencing the decision made by the IRFU to ban participation by transgender women in contact rugby.

“It is something that sporting bodies in Ireland and around the world are really struggling with," he said.

"I think it is very important that the IRFU and World Rugby and anybody that's making decisions on this, listen to the voice of those who are most affected. 

And of course, those who are potentially most affected here are those that may be excluded from playing sports. I think it's very important that their voices heard in this debate.

Asked about his proposed 30% tax rate, Mr Varadkar said he agreed that introducing a new middle tax rate in isolation would be inequitable but that is not what is intended.

“If it was done on its own, that would be equitable, and I agree with that analysis, because in any budget, you'd never just have one tax measure or one welfare measure, you'd always have a tax package and a welfare package,” he said

"So if we no matter what we do on income tax, I don't think it can be just for one group.

“I do hear some of the opposition parties saying that we should only do targeted things for those on low incomes. I don't agree with that. 

I think we need to have a universal approach where we help with help everyone the cost of living because everyone is feeling the squeeze, and yes, more targeted measures for those who need it most,” he said.

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