Windfall tax on retailers and law on profit-reporting examined

The Taoiseach said some retailers make 'bigger margins on their profits in Ireland' than in other markets.

A windfall tax on retailers and laws to force companies to report their profits are being considered, the Taoiseach has said.

Leo Varadkar told Virgin Media's Tonight Show  that he has seen "evidence of profiteering" in the grocery sector as the Government moves to quell public concern at rising prices.

He said legislation to force companies to declare the profits of their Irish arms were being examined.

"The law is different in different areas, but it's definitely something that we're examining and there is some evidence that some retailers anyway are securing bigger margins on their profits in Ireland than they would in other markets and that's not justified," said Mr Varadkar.

There's no reason why any company should be making substantially bigger margins here in Ireland than would be the case in the UK or other parts of Europe.

Asked about a call for a windfall tax on any hyper-normal profits by retailers, Mr Varadkar said he "would not rule it out".

He said that prices would "never go back to where they were" but if that the Consumer and Competition Protection Commission (CCPC) saw evidence of price fixing or "any cartel-like behaviour" it had "enormous powers".

The comments came after junior minister Neale Richmond met with retailers, who told him that if their input costs go down, those savings would be passed on to the consumer. 

Figures from the Central Statistics Office (CSO) showed that food inflation was almost double that of the general rise in the Consumer Price Index in the past year of 7.2%.

Pat McCormack of ICMSA said there was a 'lack of cohesiveness' in the Government response. Picture: Denis Minihane

Pat McCormack of the Irish Creamery and Milk Suppliers Association (ICMSA), which is due to meet Government officials in the coming days, told the Irish Examiner  that he was worried about a "lack of cohesiveness" in the Government response. He said that a four-cent cut in the price per litre of milk would mean that family farms lost tens of thousands of euros a year.

"I'm disappointed that when they talk about the price of food the primary producers weren't represented. This stuff doesn't grow on the internet, it grows in fields.

"We were told that milk prices wouldn't fall below 40c and now we see prices falling to around 37c. That was unexpected but you have to ask how low it will be allowed go.

You're talking about a cut of the guts of €150,000 a year for some farms. There are farmers at risk of going bankrupt. We're talking about a cut of 19c a litre in the last year.

Speaking in the Seanad on Thursday, Cork-based senator Tim Lombard called for food producers to be included in the debate over prices. He said that farmers were "anxious" and "worried" about retailers passing on price cuts to them.

Senator Tim Lombard called for food producers to be included in debate over prices. Picture: Jim Coughlan

"We have to make sure that primary producers are involved in this debate all the way through, because there is significant worry and anxiety within that sector that what could happen here is that the big multinational supermarket chains will come back and look for another slice from the primary producers," he said.

"The farming community cannot take that. We have seen costs go through the roof, including those for energy, fertiliser, and feed, and increase by double digits all the way through the last 18 months. That is a huge concern," said Mr Lombard.

"I believe that a significant debate in this House is required. We need to have the senior and junior ministers here so that we can debate these issues. 

"I think the primary producers are not getting a fair shot here. In the contributions I have seen and heard, in many ways, they are not even mentioned."