Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

The Central Bank has forecasted that food price increases will drive inflation to 8% by the summer, heaping additional pressure on workers and families already struggling to get by. Costs for goods and services everywhere are rising rapidly and household budgets have been vaporised. This particularly impacts on those with low to middle incomes and on those with fixed incomes. I have listened to what the Taoiseach has said about this crisis carefully and he has repeatedly stated that the Government cannot bring in separate measures every week. Nobody is asking the Government to do that. We want to see a credible and meaningful response that would provide real relief to those who are struggling, those who are worried and those who are already in trouble.

There has been a lot of political debate about the carbon tax in recent weeks, much of it ignoring the taxation elephant in the room, which is VAT. The Taoiseach has said that next month, the carbon tax increase will mean an average increase in household bills of €1.40 per month. I am sure the Taoiseach will agree that VAT is considerably more and it is ever-increasing given the enormous prices rises in energy, which provides an unprecedented windfall to the Government. Last year alone, for example, the Government took in €3 billion more in VAT than it did in 2020. A large chunk of that was from energy costs. Up until February of this year the Taoiseach was telling the House that the VAT derogation was impossible because of EU rules. On 9 March, when a cut in excise duty was announced, we were told the Government was working with EU colleagues to see whether we could introduce greater relief or flexibility in that area. Last week the Taoiseach told us that a VAT derogation had been sought. It also was reported last week that the Taoiseach told his parliamentary party that we can expect some hard proposals on energy from the EU by the end of April.

Maybe the Taoiseach can provide some details to the House on that. When exactly did the Government apply for that VAT derogation? Was it separate or was it combined with other member states? Did the Taoiseach personally make that application to the European Council on 24 and 25 March? Has the Government applied for a specific derogation on VAT, reducing it to levels of 9% or 5%, for example? When will we get an indication of when that application will be successful? The Taoiseach said the application was made yesterday. The Taoiseach said the Government is considering offsetting the carbon tax increase. Is that impacted by VAT or the public service obligation, PSO, level? Can the Taoiseach give us some sort of an indication and a timeline for that?

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