Child benefit bonus and energy rebates will feature in spring cost-of-living package

In March 2022, the Government introduced an excise duty cut of 20c per litre on petrol and 15c on diesel. It is thought they now plan to phase our that subvention. Picture: Lewis Whyld/PA

A fuel allowance lump sum, a bonus child benefit payment, and a further energy rebate are to be the main elements of the Government’s spring cost-of-living package.

A further once-off welfare payment is also under strong consideration.

However, motorists could face an increase at the pumps as the excise duty cut of 20c per litre on petrol and 15c on diesel, which was introduced last March to help reduce the cost of fuel, will be phased out between now and the next budget.

The Government is also set to dash the hopes of the hospitality industry by axing the 9% Vat rate for the sector, despite fresh calls for the lower rate to be extended.

Hospitality industry representatives met with Finance Minister Michael McGrath on Monday evening to restate their demand for the retention of the 9% rate.

While the meeting was described as a “listening exercise”, the Department of Finance is said to be keen to end the tax break amid accusations of “price gouging” by the industry.

Returning the Vat rate to 13.5% from the 9% introduced during the Covid pandemic in 2020 would make it the third highest Vat rate in Europe, according to the president of the Irish Hotels Federation.

Denyse Campbell said the 9% rate was in line with most European countries and called for it to stay to maintain competitiveness for the industry.

The cost of doing business had escalated with the sector experiencing “crippling increases” of 300% in energy bills, 28% for food and increased linen costs. Tourism figures last year were 27% lower than 2019 so the sector was still recovering, Ms Campbell said.

Mr McGrath said no decision had been made on retaining or getting rid of the 9% VAT rate, but said the meeting with the hospitality industry was very helpful.

Meanwhile, another double payment of child benefit is among the universal supports being pushed. However, one Government source cautioned that this measure would cost around €200m, so other supports might have to be sacrificed if this is adopted.

Further measures in relation to the fuel allowance were last night described as “pretty surefire”.

This could be done using another bonus lump-sum payment of the fuel allowance, but the Government is also examining another widening of the eligibility criteria so that more people receive the support.

The third of the energy credit payments that were announced on budget day is set to be distributed in March, and senior Government sources from across the coalition have indicated that a fourth €200 payment is likely before the summer.

Tánaiste Micheál Martin has also indicated that he would like further energy credits to be rolled out in the autumn and winter when households naturally see bills rise.

Speaking in Brussels on Tuesday, Finance Minister Michael McGrath said that whatever cost-of-living supports are made available in the coming week, they would be the "final intervention" before the autumn's Budget.

Mr McGrath said that there were a number of decisions to be made but that it was crucial to manage taxpayers money responsibly.

While Fine Gael and Fianna Fáil have been stressing the importance of both targeted and universal supports, the Green Party wants to focus on measures that would provide assistance to those most at risk, such as low-income workers and single-parent families.

A Green Party spokesperson said: “The focus is on vulnerable families. We are aware that there are still a lot of families who are in severe difficulty.”

Meanwhile, the Government is coming under pressure from within its own ranks to retain the eviction ban after the latest Daft.ie report showed a 13.7% rise in rents during the last year.

Green Party TD Patrick Costello said the whole State must, as a matter of urgency, be designated as a rent pressure zone.

On Thursday, a Cabinet sub-committee meeting is expected to consider the future of the various cost-of-living supports, including the reduced Vat rate, with decisions being taken by the full Cabinet the following week.

The Coalition leaders also met yesterday evening, ahead of Tuesday’s Cabinet meeting, but sources said the Vat issue is not expected to be formally discussed.