LAST UPDATE | 14 Feb 2023

TAOISEACH LEO VARADKAR has said plans to introduce a windfall tax on energy companies is “very well advanced” and will bring in “hundreds of millions of Euro”.

Speaking during Leaders’ Questions where he was asked about rising rental prices, the cost-of-living and energy costs, the Taoiseach said he predicted energy prices will fall in the coming months – first for businesses and then for householders. 

He said he wanted to acknowledge the “enormous pressure” that a lot of people are under. 

A Cabinet subcommittee on the economy is due to discuss the challenges at the end of this week, with a full Cabinet meeting next Tuesday to sign off on the new package of measures. 

Varadkar has already stated that there will be a social welfare and pensions element to the upcoming package.

In recent weeks, the Taoiseach has reiterated that there would not be a “cliff-edge” for cost-of-living supports.

Speaking about the windfall tax on energy companies, which will help fund some of these measures, will be ready in a “matter of weeks”, he said.

Companies will pay tax on the profits they made last year and this year, said Varadkar, adding that the Government will “use it to help businesses and help households with the high cost of energy and the high cost of living”.

In relation to state companies, while the exact figures are not ready yet, the Government anticipates that a number of state energy companies will record very high profit, said Varadkar.

“ESB being one of those, and we have two mechanisms that we can use to recoup some of those profits. What is the special dividend yields windfall tax, we intend to use those mechanisms to take that money back and make sure that we can use it to help our families help businesses,” said the Taoiseach. 

Rising rents 

Sinn Féin’s Mary Lou McDonald raised the issue of high rents with the Taoiseach during Leaders’ Questions. Showing Varadkar advertisements of rentals available across the country, she said it “is soul destroying stuff”. 

Renting in Ireland means “your life and aspirations are on hold … it is no way to live”, she said. 

Varadkar said the Government knows that rents are too high in Ireland, and listed of a number of actions and changes in tenancy legislation. He encouraged renters to avail of the rent tax credit which was introduced in Budget 2023. Varadkar said he hoped it is something that the Government can build on. 

 Finance Minister Michael McGrath indicated earlier today that the upcoming cost-of-living package will be the last ahead of Budget 2024.

Speaking in Brussels this morning, McGrath said that he expected this to be the last cost-of-living intervention ahead of the budget in the autumn.

He told reporters that the Government needed to get the “best possible result” from spending taxpayers’ money on further supports.

“It’s important that whatever we do is affordable, that we manage taxpayers’ money well, that we make decisions to get the best possible result from the use of public money, and that whatever decisions we make in the next week or so represent the final intervention in advance of the next budget in the autumn,” McGrath said.

“I think it’s important that we manage the resources of the country well, and we do so in a carefully considered and structured manner and so this is an important set of decisions that we have to make.”

Some of the supports due to expire include excise cuts on petrol and diesel alongside the reduced VAT rates for hospitality, gas and electricity. A final €200 electricity credit is also due to be paid out on bills for March and April.

When asked about VAT rates for hospitality, McGrath said that no decisions had been taken yet.

“We have to look at it in the round about what the overall cost of the package is to make sure that it is affordable for the country, that it represents the best and most efficient use of taxpayers’ money and then represents the final intervention before the next budget,” McGrath added.

At home, there have been calls from opposition parties for the Government to bring forward an emergency budget to deal with the cost-of-living issues, with both Labour and People Before Profit-Solidarity calling for further intervention.

“What we need is a mini budget. We need adjustments made to tax measures, to social welfare measures and to other supports that householders and businesses across the country rely on during this very, very difficult period,” said Labour’s Ged Nash.

Nash said that while it was positive Ireland will not enter recession in 2023, he said that around 50% of households are experiencing a recession due to wage levels not keeping pace with inflation.

Solidarity TD Mick Barry said that there needed to be no cuts to supports for households in the upcoming cost-of-living package.

“We are calling for an emergency budget and an emergency budget which would include real increases in social welfare, real increases in the minimum wage, across the board pay increases for walkers, which at least match the rate of inflation,” Mick Barry said.

“There must be no cuts to the household supports,” he added.

Additional reporting by Christina Finn and Press Association