Mr. Michael Taft:

A reduction in VAT is one of the tools of a countercyclical fiscal policy. In other words, it is what governments do when a recession hits. The British Government did it and, back in 2008, the Irish Congress of Trade Unions called for the Irish Government to consider it. It is a Keynesian tool used by governments whenever they get into this type of situation. There is nothing wrong with it per seand it can be very effective when it is targeted. However, an implied social contract is involved. In other words, people who receive benefits have responsibilities. If the social contract is not adhered to, and if one party decides, "I will take all the benefit but will not treat the economy, the workers or the exchequer correctly and, instead, I will grab all I can", that person fails to realise that the reason they got the benefit in the first place was because it was a social intervention in which we all share. The committee may wish to put questions to employers on the VAT reduction and the fact that, having received benefits through a number of policy instruments, they also have a social responsibility to ensure those benefits extend to everybody. That is the only way the entire economy benefits.