More clarity needed on plans for HPV catch-up scheme for under-25s, says Roderic O'Gorman
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RTÉ News
15 minutes ago
- RTÉ News
Government revenue from taxing fossil fuels expected to drop
New documents published by the Department of Finance have warned that the Government's revenue from taxing fossil fuels will drop as consumers move to using electric cars and heat pumps. The Tax Strategy Group paper says as the reliance on fossil fuels declines for energy and transport, the revenue raised by environmental taxes will also reduce. The paper takes into consideration Ireland's legally binding climate commitment to reduce Greenhouse Gas (GHG) emissions by 51% by 2030 and to achieve carbon neutrality by 2050. It highlights that over the next six years (from 2025 to 2030), it is projected that the net carbon tax volume levels of mineral oils, solid fuels and natural gas usage will fall, and estimates indicate that net carbon tax energy related CO2 emissions will also decline. In the longer term, this will mean revenues raised by environmental taxes, such as the Carbon Tax, derived mainly from home heating, petrol and diesel, will decrease and will need to be replaced by other revenue raising measures. The group's paper notes that while taxation of energy products should incentivise consumers and industry to make better choices for the environment, policy consideration of any tax measure needs also to be cognisant of a range of factors. These include the impact on the Exchequer, availability of viable alternatives, competitiveness impacts, potential regressive impacts and interaction with adjacent policy measures. Budget options to raise money The paper recommends budget options, including fiscal measures, to potentially raise money for the Exchequer and encourage behavioural change linked with reducing road transport emissions. It suggests if a 1% VRT rate increase was considered across bands 11-20, such as hatchbacks and SUVs, which would only affect cars with above average emissions, then it is estimated to raise €28 million based on 2024 registrations. While increasing the VRT Nitrogen Oxide surcharge by €5 per mg/km across all thresholds would raise €15.5 million (based on 2024 data). It also examines emissions-based VRT for Category B vehicles or light commercial vans, suggesting an option for an increased rate of 15% for vehicles with emissions of 261g/km and over. According to data from SIMI to year end in May, the market share for light commercial vehicles is 93.2% diesel and 4.4% electric. However, there is growth in the EV market share compared to 2024 figures, although it also noted a year-on-year decline in light commercial vehicle registrations. Based on Revenue data from 2024, the paper suggests the net impact of the introduction of a surcharge rate of 15%, taking into account the 8% rate effective from July, for vehicles with emissions of >260g CO2 per km is estimated at being in the region of €1 million. It also outlines an option to reduce the Benefit in Kind (BIK) liability for zero emission vehicles to increase the uptake in the corporate fleet, and future options that may include the introduction of an emissions-based BIK rate for vans.
Irish Times
15 minutes ago
- Irish Times
Second tier child benefit could leave up to 100,000 worse off, tax strategy paper suggests
The introduction of a second tier, means-tested child benefit payment would involve the replacement of some existing supports and could lead to some lower-income households losing out financially, the Tax Strategy Group (TSG) papers suggest. According to TSG, based on some estimates, up to 100,000 children could end up being worse off. The TSG, which prepares a range of papers for the Government in advance of the budget being framed, paper on social protection notes that it has been suggested that to address deprivation experienced by children most effectively would require putting in place a second tier, means-tested, child benefit payment. However, t argues that public discourse on this suggestion does not generally recognise that it involves the replacement of the second tier of child payments that already exists in the form of the Child Support Payment (a means-tested payment to families in receipt of weekly social welfare payments) and the Working Family Payment (aweekly tax-free payment for employees on low pay with children). READ MORE 'Most recently the ESRI has proposed the replacement of these payments with a single second tier payment and modelled an option costing over €700 million annually over and above the existing payments,' the paper notes. 'In doing this, it acknowledges that its proposal is in outline form would require substantial work to refine and cost fully. 'It also acknowledges that some lower income households would lose income – with payments reducing in respect of approximately 100,000 children. This is a complex issue that would need to be fully understood before any new second tier payment is introduced.' The paper notes that the programme for government contained a commitment to developing a proposal for a Working Age Payment, which would be given to low-income households based on their pay levels rather than their employment status and involve a child-related element. 'Accordingly, any new second tier payment would have to be considered in the context of how it would interact with this payment – a consultation on which is due to issue later this year,' the paper added. The paper said that pending these developments, 'it remains clear that it is important to target welfare increases to the households with children where the risk of poverty is greatest and that such an approach favours investment in targeted rather than universal benefits'. The paper says that Child Support Payment (CSP), currently paid at €50 for children under 12 years and at €62 for children 12 years and over, is one such targeted measure. It estimates that a €1 increase in the payment for both age cohorts would cost about €15.45 million in a year. 'Annual increases in the Child Support Payment mitigate the risk of poverty for families with children. There was a proportionately larger increase in the rate in respect of children 12 years and over in Budget 2025. 'One advantage to adjusting the rate of the Child Support Payment rather than the personal rate is that it equally benefits lone parents and couples with children, without an adjustment to the personal rate of each scheme. 'Other targeted measures that would directly reduce child poverty, include increasing the weekly income thresholds for the Working Family Payment and increasing the Back-to-School Clothing and Footwear Allowance. Households with children that receive other supplementary welfare supports such as Fuel Allowance would also benefit from increases in this payment. 'The support of the Public Employment Service delivered by the Department's Intreo Centres is also important in assisting parents, particularly lone parents in transitioning from welfare to employment and will have a material impact on the income levels of these households.' The paper also highlights that when one-off payments in recent budgets are excluded, increases in core social welfare payment rates between 2019 and 2025 lagged behind price inflation by between 2.5 to 5.5 per cent and lagged wage growth by between 9 and 13 per cent. 'Accordingly, as the use of 'one-off' payments is ceased, it will be important to ensure that other rate measures are effective in targeting the reduction in poverty among those most at risk of poverty,' it stated.
RTÉ News
29 minutes ago
- RTÉ News
VAT rate cut for hospitality would cost €867.7m a year, Department of Finance confirms
The Department of Finance has confirmed the cost of reducing the 13.5% VAT rate to 9% for the hospitality sector would be €867.7m in a full year. In documents published today it broke the cost down to €134.9m for accommodation, €674.6m for food and catering, €19.8m for entertainment and €38.4m for hairdressing. The Tax Strategy Group documents say that the figures will be revised again following the publication of new Central Statistics Office data later this month. On Tuesday the Government said the Budget would have scope for tax cuts of €1.5bn. But the documents warn of "practical operational concerns in having different VAT rates applying to hotel accommodation and meals given how the sector operates, with various packages ranging from bed and breakfast accommodation through to all-inclusive board and lodging packages." It added: "Having separate VAT rates would increase the risk of VAT underpayment because the charge for accommodation and meals would have to be apportioned." It said: "This is likely to give rise to administrative and operational complexity as well as increased risk of avoidance and scope for manipulation of the VAT system." The documents said that the hospitality industry said economic uncertainty created the need for additional supports for the sector due to changes in sick pay, high inflation and pension auto enrollment. The papers said there is no requirement for a business to pass on any VAT reduction to the final consumer in the form of a reduced price. The Department of Finance also said that the cost of continuing the reduced rate of VAT for electricity and gas for consumers will be €198.3m in a full year. The Government originally cut the rate from 13.5% to 9% for gas and electricity in late 2022 during a surge in energy prices. It has rolled over the reduction each year since then. The reduced rate is due to expire again on October 2025 and the Cabinet will have to decide whether to roll over the reduction for a further 12 months. On housing, it says there is a provision to allow the Government lower the VAT rate on residential construction for "social policy" from 13.5% to 9%. It said this measure would cost €805m. But it added: "This would arise in a situation where all new residential construction was classified as housing for social policy purposes." The papers show the Department of Finance has also received representations regarding reducing the VAT on bicycles and e-bikes from 23% to 13.5%. It says the cost of the reduction would be €8m. It would only apply to e-bikes with power output under 250watts and said there is no provision to apply a lower rate to scooters or electric scooters. Department officials say there is "no guarantee that the reduced rate would be passed on to consumers. This is because there is no obligation for a retailer to do so." The Tax Strategy Papers say that increasing tax bands to keep track of growth in wages would cost over €1bn if the measure is introduced in the Budget. It says that the Department of Finance forecast wage growth of 4% next year. In the Programme for Government the Coalition committed to "indexing credits and bands to prevent an increase in the real burden of Income Tax"
