Inflation is a hot topic this week as a 20-year high annual rate of 5.5 percent was announced by the Central Statistics Office in Ireland, higher than the Euro Area rate of 5.3 percent, according to Eurostat. A rate of 4.8 percent was measured by the Office for National Statistics in the 12 months to December 2021 in the UK.
Dr Brian Keegan, Director of Advocacy and Voice at Chartered Accountants Ireland weighed in on the topic in the Irish Examiner last weekend, urging Government to use VAT relief to best tackle inflation. Dr Keegan says, “While everybody feels the effects of price inflation on consumer goods and fuels, those costs make up a greater proportion of the disposable income of lower earners and VAT reductions thus have a more equitable impact” and emphasises that “the impact can be quite immediate”. On RTE Radio 1 this week, Dr Keegan called for a reduction in the VAT rate on fuel costs as a “quick fix to the real cost to people”. VAT of 13.5 percent is currently applied to electricity, coal and gas. A reduction in this cost would benefit everybody but should disproportionately help lower income earners as a higher proportion of their disposable income goes towards fuel. Our recommendations were communicated to the Government in a letter to Minister Michael McGrath this week.
A press release was held on Thursday evening by Minister for Finance Paschal Donohoe and Minister for Public Expenditure and Reform Michael McGrath to announce the new measures that will be introduced to help people suffering from the impact of inflation. The most significant of the measures is an energy rebate of €200 including VAT, which is “almost a doubling of what was originally envisaged, in recognition of increased pressures on consumers and householders”, according to a statement from Minister Ryan.
The package, totalling €505m, include a 20% cut to public transport fares, which will take effect from April and will last until the end of 2022. School transport fees will be capped at €150 for primary level pupils and €500 at secondary level. Fuel Allowance claimants will receive an extra €125 in a lump sum payment and the Drugs Payment Scheme threshold will fall to €80 from €100. The Working Family Payment budget increase of €10 will be brought forward from 1 June to 1 April 2022.
People are reminded to reach out to community welfare offices if they are struggling as there is an exceptional needs payment that can be made available.
Chartered Accountants Ireland released a press release this morning on the issue.
LOADING...