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Seanad Éireann debate -
Tuesday, 17 May 2022

Vol. 285 No. 4

Finance (Covid-19 and Miscellaneous Provisions) Bill 2022: Committee and Remaining Stages

I welcome the Minister for Finance, Deputy Donohoe, back to the House once more. He is very welcome.

Section 1 agreed to.
Amendment No. 1 not moved.
Sections 2 to 6, inclusive, agreed to.
SECTION 7

Amendments Nos. 2 to 4, inclusive, are related and may be discussed together. Is that agreed? Agreed.

Government amendment No. 2:
In page 15, line 29, to delete “and” where it secondly occurs.

The purpose of this amendment is to give effect to the Government's decision on 10 May to extend the 9% VAT rate that currently applies to the tourism and hospitality sectors for a further six months. This rate will, therefore, remain in place for these sectors until 28 February 2023 at an estimated cost up to that point of €250 million. The extension will cover the same goods and services as the original measure, which is to say, restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks and hairdressing, as well as certain printed matter such as brochures, leaflets, programmes and catalogues.

I do not need to tell the Seanad that the tourism and hospitality sector was one of those most impacted by the public health restrictions that were put in place throughout the pandemic. Through absolutely no fault of their own, bars, hotels and restaurants had to close on multiple occasions to allow our country to make its way through the very worst of the public health crisis. The 9% VAT rate was introduced as part of a wide range of measures to respond to the challenges posed by Covid-19 in order to support the hospitality sector. The Government has decided to extend the period when the rate will apply for a further six months.

I will elaborate on a final two areas of rationale for this decision. First, I am very confident that as we move into the important summer trading period, many hospitality businesses will have a very active and successful summer. What is important for all of them is to be in a position to have a good Christmas and a good start to 2023. In particular, there needs to be clarity for the hotel sector regarding bookings, especially for tours and international tour operators as we move into the early part of next year. They need to know where they stand with their pricing. In order for them to know that, they need to have clarity regarding where they stand with the VAT rate.

This is why I believed an extension beyond budget day was merited. If I had given an indication that this measure would run up to October, we would have found many businesses that were looking to put in place bookings - large bookings, I hope - approaching the middle of October but still unclear regarding where they would stand from a profitability point of view for the critical months of November, December, January and February. That is the reason the Government agreed to my proposal for a slightly longer extension than we had done with other measures that are in place at the moment.

Second, I am also very much aware that, at the end of this month, we will see the conclusion of the employment wage subsidy scheme. The Government made that decision and I remember bringing the measures into this House across the end of last year to change the employment wage subsidy scheme and to give businesses that were affected by the 8 p.m. required closure regulation an extra four weeks on the employment wage subsidy scheme. That is coming to an end in two weeks' time, which will mean many businesses which were on levels of subsidy of between €250 and €350 on 1 December will exit from the subsidies entirely by the end of this month. I expect that this decline in subsidy will be taken up by normal levels of trade as we have confidence about our economy being fully and safely open. However, the Government still acknowledges that for many businesses, after a pretty harrowing two years of trading, that is still a significant change in the support that had been made available to them.

For all of those reasons, clarity regarding where we stand with the 9% VAT rate is needed now. I believe the hospitality sector and all of its different elements are very important parts, not just of our economy, but of our society. I had the privilege of representing this sector and being responsible for it for nearly two years as Minister with responsibility for tourism, and I know at first hand the challenge involved in running a restaurant or hotel and the intense difficulty that those running those businesses and working for them have faced over the last two years. It is hard work. It is an essential part of our economy, with one in ten employees working directly or indirectly for the sector, and it is a very important part of our society. Through the employment wage subsidy scheme, the Covid restrictions support scheme and this measure, I and the Government have shown a willingness to support this sector and to help it get back on its feet when it puts the Covid pandemic behind it. That is what we are doing.

It is the final part of the jigsaw. I hope to be in a position where I see restaurants and hotels all over our country have a really good summer and get set for a good Christmas. At that point, the temporary rate will come to an end and, I hope, we will then be in a position where we will see our hospitality sector trading at the levels that it was before the sector and all of us got hit by the effects of the pandemic. I am pleased in particular to introduce this amendment in the Seanad and I look forward to hearing the views of Senators.

I thank the Minister for bringing forward the amendment. On Friday last, I was at president’s night in a rugby club and the president of the club brought up the fact that the club would have gone under only for the fact of these supports that were put in place, and he also spoke about the fact the Minister was going to bring forward this amendment on the 9% rate. It is an opportune time to compliment not only the Minister but his officials and the Department for the support that was put in place for the hospitality industry. I happened to be at the launch of a degree programme involving a collaboration between the vintners and Griffith College yesterday evening, and I met many young apprentices who were going onto this programme. I spoke with some publicans who also acknowledged the benefit of the supports which, as the Minister noted, will be coming to an end.

I believe the 9% VAT rate will certainly help businesses to keep afloat. From speaking to business people, they are not yet back to 100%. I believe it is an opportune time and the fact it is being extended until the end of the year is most welcome. It was acknowledged not only by the publicans but also by the sports clubs that pubs and sports clubs would have gone under only for the supports. I thank the Minister. I look forward to supporting the amendments he is bringing forward today. If we think about the industry anywhere from Temple Bar in Dublin to the west coast and throughout the country, there is hospitality and bars, clubs and hotels in every village, small town and city. I believe the industry is very grateful for the supports. I think it is the right time to extend the 9% VAT rate because it will help them to get back to the 100%, given some are still not open seven days due to difficulties with staffing and different issues, although they are getting there. I believe it is the right time. I compliment the Minister and the Department.

I thank the Government and the Minister for the supports for the hospitality sector over the last two years. As the Minister will know, I am directly involved. As he pointed out, at the end of this month we are coming off all the supports that have been there for the past two years. We always get used to supports and we have to try to wean ourselves off them. We are in a challenging position at the moment. Senator Maria Byrne mentioned staff shortages and there is also the cost of living, so it is appropriate to try to extend the VAT rate into early next year to try to give that certainty and confidence to go into next year and to sustain and develop our product. All I can do is thank the Minister from my family point of view and from a personal business point of view. To follow on from Senator Maria Byrne's point, we would have failed too without the Government’s support over the last two years. Everybody out there in business recognises that, accepts that and is grateful for that. We are equally grateful today for the extension of the VAT rate for the hospitality sector.

It is a significant period as we approach the conclusion of the employment wage subsidy scheme. I remember very clearly the discussions that we had in 2020 with some of the officials from the Department of Finance who are present today. We got into very challenging discussions regarding what would be in and what would be out of the scheme. I remember the discussions we were having regarding sports clubs and voluntary organisations in buildings that might have a bar in them. We made the decision to have the criteria as broad as possible to facilitate businesses, not just those that Senator Casey knows well, but also organisations that may have had a few members of staff but would have had a bar that, in turn, provided the commercial revenue to help it to continue to fund its voluntary activities and look after its buildings, such as a rugby club or GAA club. I am very glad we did that.

If we look at where we are now, I hope the harshest economic effects of the disease are behind us. However, it would be a poorer Ireland if we found ourselves in a position where we had a hospitality sector that was not able to open up, or if we found sporting clubs and organisations across our country no longer with us or no longer viable. For all of those reasons, while the cost of these schemes was truly huge, and the employment wage subsidy scheme at times was €500 million a month, nonetheless, it was an investment in our future. That future is now opening up in front of us. I appreciate the support of the Senators for the 9% VAT rate.

As I said, I really look forward to a good summer for our hospitality sector and a clear run for it into the early part of next year.

Amendment agreed to.
Government amendment No. 3:
In page 15, line 34, to delete “paragraph (c);”. ” and substitute the following:
“paragraph (c);”,
and”.
Amendment agreed to.
Government amendment No. 4:
In page 15, between lines 34 and 35, to insert the following:
“(d) the substitution in paragraph (cb) of “28 February 2023” for “31 August 2022”.”.
Amendment agreed to.
Section 7, as amended, agreed to.
Sections 8 to 11, inclusive, agreed to.
SECTION 12

Amendments Nos. 5 to 8, inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed.

I move amendment No. 5:

In page 25, line 2, to delete “€465.98”, where it firstly occurs, and substitute “€359.00”.

The Minister is very welcome. The purpose of amendments Nos. 5 to 8, inclusive, is to provide further relief and support to hard-pressed households during this cost-of-living crisis. Sinn Féin recognises that the Government cannot shield everyone from every price increase. However, we are fully aware that the Government can and should do more to support low- and middle-income households which, without support, cannot withstand these price increases without significant hardship.

Amendment No. 5 would reduce the price of petrol by a further 13 cent per litre, including VAT. Similarly, amendment No. 6 would reduce the price of diesel by a further 9 cent per litre, including VAT. Both amendments are consistent with the requirements of the excise directive. Amendment No. 6 would require the temporary suspension of the diesel rebate scheme, but would ensure the benefits of the scheme would continue to be enjoyed by those who qualify due to the excise reduction provided by the amendment. Similarly, amendment No. 8 provides for a further reduction of 3.3 cent per litre, including VAT, relative to April 2022.

Crucially, amendment No. 7 addresses the spiralling costs of home heating oil, which impacts on one in three households in the State and, if passed, would remove excise duty on a temporary basis and reduce the cost of filling a tank by €118. In the past 12 months, its cost has more than doubled, with the average price to fill a tank reaching a staggering €1,700 in March 2022, and it will not get any better. Many households simply cannot bear these price increases and they feel forgotten by this Government. More than one third of households across the State use home heating oil as their main heating fuel. These households have received no relief with respect to the cost of home heating oil.

A few weeks ago, the Government voted against a Sinn Féin amendment that would have removed excise duty from home heating oil and reduced its price. Instead, the Government made it even more expensive with a further carbon tax hike. That is wrong, senseless and places ideology above the realities facing workers and families.

Amendment No. 7 provides the Seanad and Minister with an opportunity to do the right thing and reduce the cost of home heating oil. I ask Senators to use this opportunity to make a difference by voting for the Sinn Féin amendments and protect families.

I thank the Senator for bringing forward these amendments. I will say a word about each of them in turn.

The amendments propose various further rate reductions from 1 May until budget day. The Senator seeks to reduce the mineral oil tax rates on petrol and diesel to the minimum rates, as prescribed in the energy tax directive, and to further reduce the rate on marked gas oil by 2 cent. The amendment also seeks to remove the carbon component on kerosene by reducing the overall rate to zero. The proposed mineral oil tax rate for diesel would not be compliant with the minimum rate set out in the energy tax directive. That is the key point. What we are being asked to do by Sinn Féin is not allowable under the energy tax directive of the European Union. We cannot do this.

The combined effect of the measures the Government has already provided means that the current minimum tax rate for diesel, in addition to the diesel rebate scheme, is effectively at the minimum rate allowable under the energy tax directive. Any further excise reduction, as the Senator is proposing, would bring the effective rate below the minimum permissible rate. To apply a mineral oil tax rate of 33 cent per litre would mean the Government would have to scrap the diesel rebate scheme, which is a targeted support for hauliers and public transport operators.

Mineral oil tax on kerosene for home heating has a non-carbon component rate of zero. The carbon component is €103.83 per 1,000 l. In other words, there is only carbon tax on kerosene. The Senator proposes to completely remove the carbon tax element, thereby reducing the mineral oil tax to zero. Similarly, the reductions the Government has provided for in the rate of mineral oil tax and marked gas oil mean that the non-carbon component is zero until 12 October. As there will only be carbon tax on the fuel, this means the further reductions in mineral oil tax proposed by the Senator would also involve reducing the carbon component on this fuel.

Senators will be aware of the Government commitment on carbon taxation. We appreciate that the decisions made recently on fuels from 1 May were particularly challenging for many, but this is the reason the Government went ahead with measures to reduce VAT on gas and electricity. The cash effect of those measures in reducing the VAT on those forms of energy will more than offset the increased price of home heating oil for households.

For these reasons, I am not in a position to accept the amendments brought forward by Sinn Féin. Some of them are simply undoable and would involve a breach of European Union law. In recognition of the difficulty and hardship some are facing as a result of the increase in carbon taxation in home heating oil from 1 May, the Government has brought in a set of additional measures, which will have the effect of more than offsetting the impact of the change in carbon tax on home heating oil. For these reasons, I cannot accept the amendments.

As we are clearly not going on these issues, I will press the amendment.

Amendment put and declared lost.

I move amendment No. 6:

In page 25, line 2, to delete “€405.38”, where it firstly occurs, and substitute “€330.00”.

Amendment put and declared lost.

I move amendment No. 7:

In page 25, line 2, to delete “€103.83” and substitute “€0.00”.

Amendment put and declared lost.

I move amendment No. 8:

In page 25, line 2, to delete “€138.17” and substitute “€93.52”.

Amendment put and declared lost.
Section 12 agreed to.
Sections 13 to 17, inclusive, agreed to.
Title agreed to.
Bill reported with amendments.

When is it proposed to take Report Stage?

Bill received for final consideration.

When is it proposed to take Fifth Stage?

Question, "That the Bill do now pass", put and agreed to.

When is it proposed to sit again?

At 10.30 a.m. tomorrow.

Cuireadh an Seanad ar athló ar 9.02 p.m. go dtí 10.30 a.m., Dé Céadaoin, an 18 Bealtaine 2022.
The Seanad adjourned at 9.02 p.m. until 10.30 a.m. on Wednesday, 18 May 2022.
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