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RTÉ News
8 hours ago
- RTÉ News
First kite of pre-budget season flew over Leinster House
Bird watchers sometimes herald the sighting of the first swallow of the year as the start of spring. And, not to be outdone, political anoraks have a similar phrase too. The first kite of the pre-budget season flew high and mighty over a quieter than usual Leinster House this week, as the beginning of the Dáil's summer recess was interrupted by a potentially serious political row gliding into view. Not for the first time, it involved a once cast-iron pre-election promise whose carefully choreographed landing now risks becoming a victim of some not exactly unexpected post-election economic turbulence. And, not for the last time, the planned flight trajectory could yet be replaced by an all too public nose dive as the Coalition checks its political radar for signs of how to navigate its way between two competing financial priorities. Hospitality tax cut The reason for the situation is a Programme for Government promise which is now at real risk of being delayed. In the January document, which outlines what Government intends to do in power, the Fianna Fáil-Fine Gael-Independents Coalition confirmed that the existing 13.5% hospitality VAT rate would be reduced. That commitment, which was one of Fine Gael's key commitments in last November's General Election, was widely seen as indicating but did not explicitly point to this October's Budget as the moment the 13.5% rate would be cut to 9%. Such a move would support struggling restaurants, bars, cafes, pubs and hotels, and therefore help protect jobs. "Our Budget decisions could change depending on the economic environment we find ourselves in." But its near €1 billion price tag would mean less financial space for cost of living supports for the wider pubic, an issue that was made crystal clear as Government outlined its immediate economic plans this week. During a press conference at Government Buildings on Tuesday, Taoiseach Micheál Martin, Tánaiste Simon Harris, Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers announced the Coalition's National Development Plan and Summer Economic Statement. The former outlined a €275bn capital projects war chest for the coming decade, including aspirational promises and dazzling numbers like €36bn for housing, €22bn for transport infrastructure such as the long-delayed Dublin Metro, and almost €10bn for health. But the latter was more pragmatic, detailing in practical terms how much money Government actually has to play with in its coffers right now - and, specifically, space for €1.5bn worth of tax cuts in Budget 2026. The figure may seem like a lot, and it is, but it still does not pay for everything voters want. And, inevitably, that means difficult choices for the coalition to make, including when it comes to promises previously given. Despite both Mr Martin and Mr Harris saying in recent months that the cut will happen, Mr Donohoe told reporters that the expected hospital VAT reduction from 13.5% to 9% was not as certain as previously indicated. Rarely one to misspeak, Minister Donohoe explained that if the hospitality VAT rate is reduced it is important "to be open" about the fact "trade offs" with other sections of society may be necessary. "I have always made clear my intention with regard to that [the hospitality VAT cut]," he said. His use of the word "intention" rather than anything stronger peaked the interest of attending reporters. "But I have also said there are trade offs, and there are consequences to that," he said. "And there are therefore other things that we are not going to be able to do. "If you were to bring forward a tax package that was to fund a full year measure that was in relation to the VAT, the cost of that would be nearly a €1bn." "And then if I was to add to that other measures we've done in the past, we would have a tax package that is far bigger than what I believe would be safe," he said. He added: "Our Budget decisions could change depending on the economic environment we find ourselves in." A pre-budget kite, in other words. And one that has caused if not a split, then certainly some friction, within the Coalition as competing political priorities have emerged. Internal Coalition friction While Minister Donohoe's comments were likely designed to point out the reality of the dilemma for Government rather than specifically rule out the hospitality tax cuts this year, they did open the door to the prospect within at least some sections of the coalition. By Wednesday, several Government sources had indicated privately that the cut should be delayed until July 2026, with Fianna Fáil members - including the wily long-time Limerick City TD Willie O'Dea - among those to publicly nudge forward the argument. Speaking on Friday on RTÉ's Morning Ireland programme, Deputy O'Dea said given the limited scope for tax reductions in the upcoming budget, he would "like to see it [the €1.5bn in available tax cuts] more equitably divided", with "an increase in tax credits and tax bands in line with inflation" his priority. Asked if this is because it would be difficult to convince voters to support helping the hospitality sector first, given a disputed reputation for price gouging by some businesses in that sector, Deputy O'Dea said: "It's not just a question of would it be hard to sell to the public, it's would it be good for the economy." Responding to suggestions of friction in the Coalition over the situation, he added: "I wouldn't describe it as friction, people have different views and that's what Coalition government is about." "I don't understand what kind of kites the Government are flying in relation to this cut for the hospitality industry, the Government are sewing massive seeds of confusion on this yet again." Deputy O'Dea's view was echoed privately by numerous Fianna Fáil TDs, and a smaller number of Fine Gael colleagues, who questioned how prioritising help for businesses instead of cost of living supports for the wider public might play out. And senior Government sources did little to kill off the suggestion when asked. But Fine Gael TD and Minister for Enterprise and Tourism Peter Burke - the politician responsible for the sector - had a different view during a hastily organised press briefing at Government Buildings on Thursday. Asked if he would acknowledge the hospitality VAT tax rate cut will now be delayed until next summer, Minister Burke responded: "Absolutely not acknowledging that, any negotiations will form part of the budget. "We're now still in July and it's very important to note the Budget will consider all options in every different sector." Opposition criticism The opposition, it is fair to say, were less than impressed over the apparent confusion over whether the hospitality tax cut would still go ahead on 1 January or be delayed until at least next July. Labour TD Duncan Smith said bluntly: "I don't understand what kind of kites the Government are flying in relation to this cut for the hospitality industry, the Government are sewing massive seeds of confusion on this yet again." That view was shared by other opposition TDs, including Sinn Féin's Donnchadh O'Laoghaire who said the Coalition needs to find a way to help both the hospitality sector and the wider public through cost of living supports. And it was echoed too by non-political groups representing those in the sector, which became locked in a war of words over what should happen next. Responding to the watering down of the previous tax cut promise, Restaurants Association of Ireland Chief Executive Adrian Cummins said: "If the VAT rate doesn't reduce to 9% from January 1, you'll see more and more closures" and resulting job losses, noting more than 200 restaurants have already closed this year. However, the view was countered by the Irish Congress of Trade Unions general secretary Owen Reidy. "The proposal to cut the VAT rate at a time of huge economic uncertainty flies in the face of all available evidence, and would amount to nothing less than economic vandalism," he said. "The Government has identified many laudable priorities as part of its programme for Government: housing, reductions in child poverty, and investment in disability services. "Given that ministers have been giving serious warnings about economic uncertainty, why would they prioritise a corporate handout costing almost €1bn?" Government dilemma That latter point goes to the heart of the difficulty now facing Government, and in part helps to explain the early nature of this week's at times contradictory pre-budget kite flying. While there is a strong argument for the need to protect businesses, and therefore jobs, in the hospitality sector during a period of intense global financial uncertainty, few politicians would want to be seen to be doing so at the expense of supports for households during that same economic turbulence. In that context a calculated delay to the hospitality VAT rate cut plans makes some sense, as it would allow Government to continue to argue it will - eventually - keep its promise while giving itself more short-term financial space to protect the wider public. That plan, however, comes with a significant catch, in that the hospitality sector is insistent a delay to the tax cut will see people lose their jobs. But, more than one Government TD has privately noted this week, not delaying the tax cut in order to have more space for wider public cost of living supports would put households at risk and give opposition parties an obvious line of attack the coalition could do without. The first kite of the pre-budget season has now soared into view. Depending on which way the economic and public wind blows, it could yet lead to an unexpectedly bumpy political ride.
RTÉ News
5 days ago
- RTÉ News
Hospitality boost in Budget to shrink workers' tax cuts
The big winner from next year's Budget is going to be the hospitality industry. That will happen at the expense of income taxpayers. The cost of reducing VAT from 13.5% to 9% for restaurants, bars and cafés is going to be up to €1bn in a full year, Minister for Finance Paschal Donohoe said. That will be out of a package of tax cuts of €1.5bn, according to the Summer Economic Statement, which was published by the Government earlier. In other words, two-thirds of the capacity for reducing taxation could be absorbed by the hospitality industry. Mr Donohoe said when the Coalition made the commitment to cut the rate of VAT it meant there would be "tradeoffs and consequences" and "there are other things we are unable to do". He warned the threat of US tariffs meant that it would "not be right to grow the tax package given all we are confronting". In Budget 2025, the average worker benefited by around €1,000 from reduced taxes. That was based on a package of €1.4bn. When the Government proceeds with the VAT reduction for the hospitality industry, it would leave €500m for tax cuts elsewhere. On that basis, ordinary workers won't enjoy a similar reduction in taxation next year as they did in 2025. Trimming VAT for hospitality was a commitment which was originally made during the General Election in November last year and it was included in the Programme for Government in January this year. It would be difficult to renege on such a clear political promise. Another important element of the Summer Economic Statement is that it is predicated on zero tariffs being imposed on exports from Ireland to the US. Currently many sectors are free from tariffs including pharmaceuticals and computer chips. But other areas such as food and drink exports have been hit with duties of 10%. While the deadline for a deal on tariffs is 1 August, the issue has been long fingered twice by US President Donald Trump who has variously suggested tariffs of 20%, 30% and even 50% on EU goods. There is a very clear caveat in the Summer Economic Statement, that if the trade war between the US and EU worsens, the Government will have to revisit the tax package. It means the coming weeks and possibly months will be critical in determining the shape of the Budget.
The Irish Sun
6 days ago
- The Irish Sun
Let kids be kids or should teens be heard? Our writers divided on voting age debate as electoral overhaul splits opinion
LAST week Britain moved to lower the voting age to 16 in all UK elections. It was a major overhaul of the country's democratic system that immediately split opinion over whether they should or would cast ballots. 5 Globally, most countries have a voting age of 18 Credit: Getty Images - Getty 5 Changes have been proposed to boost participation and trust in the electoral system Credit: Getty Images - Getty The proposed changes were designed to boost participation and trust in the electoral system, which suffered its lowest turnout at the But in last year's European Parliament elections, So should In The Irish Sun today, reporter JODIE McCORMACK and Political Correspondent ADAM HIGGINS argue both sides. FOR - JODIE MCCORMACK 5 Jodie McCormack says being young 'does not equate to being uninterested in politics' Credit: Collect IN 2016 Ireland held a General Election and in 2018 the Referendum on the regulation of termination of pregnancy took place. I voted in neither, despite the direct impacts both would have on my future as a young woman in Ireland. Had the voting age been lowered to 16 at the time, I would have been first in line at the polls. With the While cynics may argue 16 and 17-year-olds are too young to form a valid political opinion, we already trust them to pay tax through part-time Simon Harris 'does not expect' poll on Irish unity in this decade Many will move away from home to start college, work or apprenticeships and rent their first property having never voted in this country. Politics and society was introduced as a Leaving Cert subject in 2016, with the first exam sat in 2018. In 2022 Norma Foley, then Minister for Education confirmed 2,261 pupils sat the subject in 2019, 3,476 in 2020 and 4,084 in 2021. Steadily increasing numbers which could be further increased if all senior cycle students had the opportunity to vote, not just the handful of 18-year-olds in 6th year. The interest is there from Ireland's young people and now is the time for that interest to be heard. Jodie McCormack This also gives Being young does not equate to being uninterested in politics. The Central Statistics Office report a voter turnout of 50 per cent in the 2022 General Election in the 18-25 age category. In 2024, Both didn't have a vote just a handful of years before that. The evidence is clear, the interest is there from Ireland's young people and now is the time for that interest to be heard. AGAINST - ADAM HIGGINS 5 Adam Higgins says he 'can't imagine many 16-year-olds are even interested in voting' Credit: Crispin Rodwell - The Sun Dublin CAN we not let kids be kids anymore? Why are we rushing to ask teenagers to start making important decisions about who should run the country when they barely know who they are as a person yet? At 16, kids should mainly be worried about their I don't think it is fair to put it on 16-year-olds to help decide what direction the country should go in. GROUPS TARGETED In the run up to elections, politicians and their PR machines specifically target different groups in a bid to win votes. In the past it was solely through clever slogans, policy proposals and quotes in media interviews and at press events. However, increasingly politicians are using Do we really want our teenagers' social media pages bombarded with messages from political parties of all hues warning them about all the things that are wrong in the country and how they are the only ones that can fix it? Surely there's an easier way to increase voter turnout than lowering the voting age? Adam Higgins This is a time when we are constantly reading about rising levels of anxiety and mental health issues in our young people. Social media is often blamed as one of the main reasons for this – do we really want to throw politics into that mix? I think it is important to get more people into politics and try increase engagement with the system. But surely there's an easier way to increase voter turnout than lowering the voting age? WHO BENEFITS? What about automatic voter registration for every citizen over the age of 18? I think we also have to consider who would benefit from this change. I can't imagine many 16-year-olds are even interested in voting. How many of you reading this now were engaged in politics when you were 16? Some teens are really passionate about it already and they would probably make great TDs, let alone voters. But for the majority of teens, they will probably just listen to their parents and vote for whomever they vote for. Let's leave our teenagers with two more years of life experience before we ask them to form an opinion about the future of the country. 5 Should Ireland allow people to vote from the age of 16? Credit: Getty Images - Getty
