Ryan O'Meara (Tipperary North, Fianna Fail)
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97. To ask the Minister for Finance how VAT receipts to date in 2025 compare to the same period last year; and if he will make a statement on the matter. [39246/25]

Mattie McGrath (Tipperary South, Independent)
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Question No. 97 will be introduced by Deputy Shay Brennan.

Shay Brennan (Dublin Rathdown, Fianna Fail)
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I note June is a non-VAT-due month yet receipts so far have been relatively robust, with cumulative VAT up by €0.6 billion at €11.6 billion, albeit reportedly about €100 million below profile. Will the Minister comment on the significance of these figures?

Paschal Donohoe (Dublin Central, Fine Gael)
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The Exchequer returns for the first half of the year were published at the beginning of the month and the Deputy has just touched on them. VAT receipts amounted to €11.6 billion, which is an increase of €600 million and is just under 6% higher than in the first half of last year. The growth in VAT is consistent with the increase in consumer spending. On an annual basis, nominal spending was up by 4.7% in the first quarter of the year, the latest for which data is available. High-frequency indicators such as card payment data suggest that positive momentum has continued into the second quarter, which is also consistent with the VAT data I shared with the Deputy.

Shay Brennan (Dublin Rathdown, Fianna Fail)
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While the increase of €0.6 billion in cumulative VAT receipts is encouraging, there are signals of underlying volatility. VAT is approximately €100 million behind profile, as I stated. Although modest in percentage terms, that may indicate emerging trends. Will the Minister elaborate on what the Department interprets as the trend in VAT collection so far this year? Specifically, does the Minister anticipate receipts will realign with projections or could the gap widen as the year progresses? The programme for Government acknowledges the impact of rising energy costs on businesses and households and pledges tax measures such as changes to VAT to help mitigate these pressures. There is also a commitment to support SMEs, particularly in the retail and hospitality sectors, potentially through adjustments in VAT, PRSI and other measures in the coming budget. Will the Minister indicate whether specific VAT measures will be considered in the forthcoming budget, particularly for sectors facing acute cost challenges?

Paschal Donohoe (Dublin Central, Fine Gael)
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On overall tax receipts for the year, particularly when it comes to VAT, the advice I have received is that we expect to collect the VAT we indicated we would collect for the year. Currently, we are in line to deliver that target. I am aware of the role VAT can play in helping with the cost pressures businesses are facing. The programme for Government contains a clear commitment in relation to VAT for the food sector and gas and electricity. The decision in relation to VAT for gas and electricity has now been made to extend that up to budget day.

Shay Brennan (Dublin Rathdown, Fianna Fail)
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In light of the urgent issues in housing supply, IBEC recently proposed that the Government address apartment construction viability directly by reducing VAT on new-build apartments by 5% and discontinuing development levies on such projects. Its analysis suggests these actions would reduce direct State-imposed costs at a cost of about €86 million, which is less than the shortfall between VAT receipts and the departmental profile. Given the number of apartment completions has reportedly fallen considerably this year to date and IBEC is now arguing for this intervention as consistent with the social imperative for increased housing supply and the VAT directive requirements, is such a targeted VAT reduction or the removal of development levies under consideration by the Government as part of budget deliberations? Does the Minister believe there are alternative tax measures that would better incentivise the construction of much-needed new apartments?

Paschal Donohoe (Dublin Central, Fine Gael)
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I cannot comment on decisions that will be announced on budget day. Deputy Brennan raised the particular issue of the 5% rate for the apartment sector.

I have been advised by my officials in this area that if any attempt were to be made to move apartments down to 5%, other goods that are sold at the middle VAT rate would need to be moved down to 5% as well. That would have a particular effect on decisions we make with regard to food, accommodation and hospitality.

I am advised that we cannot make a decision on a 5% rate for an apartment dwelling in isolation of the fact that we would need to move other parts of our economy down to the same rate with an extremely significant cost behind that. As I said, any such decisions will be considered carefully and announced in early October.