Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

As the House will be aware, the Central Statistics Office, CSO, figures that came out today indicate that the annual inflation rate is now at 6.9%. It is estimated it will rise to approximately 8% later in the year, before falling off towards the end of the year and into next year. That will come as no surprise to anyone in this House, nor will it come as any surprise to people who have been experiencing the price increases in their everyday lives.

What the CSO is confirming today is what people have been experiencing over the past three to six months. We know that from the increase in the price at the pumps. We know it from the increase people are seeing in their utility bills. We know it from the increase people are seeing in their grocery bills. It is impacting on family and household budgets. It is also impacting on the cost of doing business. Government acknowledges that.

That is why we have acted already to help ease the burden of rising prices. The Deputy acknowledged in his contribution that no government can fully offset the cost of rising prices but we can offset it substantially. That is what Government has done through a tax and welfare package in the last budget to increase the pension and welfare rates and reduce income taxes for people on middle incomes, something the Deputy's party has opposed and continues to oppose.

People now see the €200 coming off their electricity bill. That has started to take effect. There has been a €125 fuel allowance increase for those most vulnerable houses because it is important we target what we are doing towards those who need it the most. We have had the biggest cut in excise duty ever with 20 cent taken off petrol and 15 cent taken off diesel, which more than reversed the carbon tax increases that occurred in recent years on petrol and diesel, as well as special measures for hauliers, tillage farmers and others in society.

There has already been a substantial response from Government to help people with the burden of rising costs, worth between €1 billion and €2 billion, depending on how one calculates it. That is not small and is much greater than has been done by other governments throughout Europe. However, we acknowledge that more needs to be done, given that prices continue to rise. We do not want to chase every price increase with an action that is not sustainable or credible. We want to look at it in the round, both in the next budget and before it.

With regard to the carbon tax increase due in May, it is important to say that does not apply to petrol, diesel or electricity. It applies to home heating oil and will add approximately €20 to the cost of filling a full tank with home heating oil and it will affect gas. It will increase the cost of gas by approximately €1.50 per month. If one does not have €20, it is a lot of money.

If one does not have €1.50, it is a lot of money. We will bring in measures before May to offset that increase. It is important to be honest about the scale of that increase. From some of the commentary, one would think that carbon tax is somehow responsible for all, most or even much of the increases people are experiencing. That is not the case. This will add about €20 to the cost of a tank of oil to heat a house and about €1.50 to gas bills, and we will offset that.

Regarding the Deputy's proposed solution of reducing VAT, which he has asked us to consider, we will of course consider that approach. Currently, however, that is not possible. We had an engagement with the European Commission. The Taoiseach and the Minister for Finance have had it. We already have a discretionary VAT rate in Ireland. We have one of the lowest VAT rates on energy in Europe. We are already down to the lowest possible rate in respect of excise on petrol and diesel. If we were to try to do what the Deputy is proposing now, it would not be possible because it is not lawful or legal. If we were to reduce the VAT rate to 12%, if that were possible, we would then have to put it back up to 23% because of the way the VAT directive is structured. In opposition, Deputies have the convenience of making proposals and promises that cannot be implemented. What the Deputy is proposing now, at least, cannot be implemented.

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