TAOISEACH LEO VARADKAR has strongly indicated that government will put a hold on fully restoring the excise increase on petrol and diesel in October.
Speaking at the opening of the Fine Gael party think-in in Limerick today, Varadkar said there will be fewer one-off measures and targeted mortgage interest relief is being considered.
Rates were due to be fully restored on 31 October with a final increase of 8 cent for petrol, 6 cent for diesel, and 3 cent for market gas oil.
However, prices at the pumps have been on the rise again, with prices close to the €1.80 mark today.
Varadkar indicated to reporters today that the final increase could be put on hold.
“One of the prices that I am very aware of and I know all of my colleagues are very aware of is the price of petrol and diesel. It’s the price that’s in your face every day as you drive down the road and it is tacking back up again, in part because some of the temporary tax cuts have been reversed but also because the price of oil is going up again.
“If you remember, we cut excise around the time it hit €2 – you know, I wouldn’t like to see us put excise up to hit €2 again and then to have to bring it down again.
“So I think what we’ll do between now and Budget Day is really monitor prices at the pump and that will allow us on Budget Day to make that decision,” he said.
Finance Michael McGrath has previously indicated that the excise issue will be monitored in the run up to the budget.
Speaking to reporters today, the Taoiseach also confirmed that targeted mortgage interest relief is also under consideration for homeowners.
Yesterday, saw the tenth ECB rate hike announced in a year.
The Journal reported two weeks ago that Finance Minister Michael McGrath is currently working on budget ideas to help mortgage holders, particularly those trapped paying high interest rates to overseas funds.
It is understood the finance minister is working with Social Protection Minister Heather Humphreys on possible measures, which could include targeted measures that are limited to borrowers who tried to switch mortgage providers and have been refused.
Expanding the Mortgage Interest Supplement to provide short-term income support to those who are unable to meet their mortgage interest repayments is under consideration.
Other ideas being worked on included enabling mortgage holders to switch their loans from a vulture fund to state-backed initiatives such as the Local Authority or Rebuilding Ireland home loans scheme.
Asked about what is being worked on, Varadkar said the government appreciates that a lot of people are experiencing financial distress due to rising mortgage interest rates going up so quickly.
However, he said broad mortgage interest relief measures would be “primitivaley expensive”.
“If we are going to do something to help people on mortgage interest, it really should focus on those who are paying the highest rates and those who might be at risk of losing their homes. But the detail of that hasn’t been worked out, it’s being worked on by Minster McGrath at the moment and Minister for Social Protection,” he added.
Varadkar said the rate hikes is “probably the peak of the cycle”.
“I don’t anticipate further interest rate rises,” he added.
“We can help people through income tax cuts in that regard but if we do something on mortgage interest, I think it has to be very targeted at those who are experiencing severe financial distress, perhaps have very high interest rates or perhaps are at risk of losing their home.”
The Journal also asked the Taoiseach if PAYE workers can expect to be able to receive tax-free bonuses of more than €1,000 in this year’s budget, however, Varadkar said he did not expect it to increase this year.
The previous amount workers could claim tax-free was €500 and this was increased €1,000 last year.
“I don’t anticipate that increasing, you know, it went up from €500 to €1,000 last year. So I don’t expect that going up again in the budget,” he said.
The focus for government is on making sure that middle income people pay less income tax and USC, he said.
The Taoiseach was also questioned about the plan for tax breaks for landlords, with Varadkar acknowledging that it is an outstanding commitment made by government that needs to be fulfilled.
“We do intend to include something in the budget that will help small landlords and encourage more of them to enter and stay in the market. But I would be of the view that if any a tax concession is given to small landlords, it must help tenants and renters in some way and I think that’s quite an important principle,” he said, adding that it should be linked to the rights and security of tenants .
The Taoiseach confirmed there will be one-off measures in the budget, which will fall in this calendar year.
“But again, none of those are agreed yet I don’t think they’ll be on the scale of last year.
“Bear in mind since last year, inflation has started to moderate, wages have increased. So I don’t think one-offs will be on the scale of what people would have seen last year.”
When asked about the hospitality sector, who have been fighting to have its 9% VAT rate reduced again, Varadkar ruled it out.
“Generally speaking, I think tourism, hospitality, hotels are doing quite well at the moment and that’s why a concessionary rate of 9% isn’t justified anymore, we need to focus our tax priorities elsewhere, particularly around things like the cost of energy, for example, petrol, diesel and helping families and all businesses, including hospitality, with those high costs,” he added.
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