Tánaiste Simon Harris has said he is “not rowing back” on Programme for Government commitments to cut the hospitality VAT rate despite saying the timing of any measure will be decided on budget day.
Speaking to reporters at Government Buildings, the Tánaiste said while the cut will be the “subject of budget negotiations”, the Programme for Government has made “clear commitments” in relation to the matter.
Last week, Minister for Finance Paschal Donohoe indicated that while the hospitality VAT rate cut from 13.5% to 9.5% is still planned, introducing the measure in autumn’s budget would take up almost two thirds of the available tax reduction space.
In the immediate aftermath of the remark, a number of Government sources indicated that the hospitality VAT rate cut could now be delayed until next summer – a move understood to be supported by some in Fianna Fáil but opposed by Fine Gael.
Asked about the possible delay to the tax cut, which business groups say is needed in order to protect jobs, Tánaiste Simon Harris said “the timing of any measure will be a matter for budget day”.
However, when asked if he is “rowing back” on his previous position in early summer that the tax cut commitment was a “solemn” promise, he added: “I’m not rowing back on anything, but I suppose I’m being respectful to the budgetary process.
“The Programme for Government says what it says. I believe the Programme for Government is very important, it’s a contract between two political parties and some Independent TDs, and therefore I believe the words in it matter.
“It talks about reducing the cost base for small businesses, particularly in the hospitality sector around food. And we’ll work our way through that.”
The Tánaiste repeated his position that he is “not going to get into specific budget measures or the timing, other than to say all of this can be discussed in the round”.
However, he said that “towards the end of the summer” Government intends “to take stock again” in relation to the potential impact of international trade and tariffs deals, “and then we’ll reserve the right to finesse the summer economic statement as required”.
