The Coalition Government has announced a new wave of cost-of-living measures, ranging from new childcare and social welfare payments to helping businesses with their energy bills. For a lowdown on what’s being covered (and what isn’t), read on below.
As many of the cost-of-living supports signed off in the Budget of 2023 were due to expire at the end of February, the Government has signed off on a €1.3 billion package to extend and expand certain supports aimed at curbing the cost-of-living crisis.
There are extra supports for those in receipt of social welfare payments, extensions to the business energy support scheme and a range of tax and excise cuts to help households and businesses weather the current economic storm.
However, there were noticeable absences for extra payments, most notably in regards to housing and renters, while the decision to extend the lower rate of VAT for the hospitality sector has drawn some ire from certain quarters.
Those in receipt of a social welfare payment, such as people on disability, carers and pensioners, will receive a once-off ‘top-up’ payment of €200 in April. This is akin to the Christmas bonus, and doesn’t include any lasting increases to payments.
Families will also benefit from a once-off universal Child Benefit payment of €100 for each child, while those in receipt of the Back to School Allowance will receive an extra €100. These will be paid in June.
In addition, the waiver of fees for sitting the Junior Cert (€109) and Leaving Cert (€116) has been extended for another year.
From September a reduced charge will apply to school transport which will be €50 per pupil at primary level, €75 per pupil at post-primary level, with a cap per family of €125. And The Hot School Meals programme will be extended to all DEIS primary schools from September, benefiting 64,500 children
The Government confirmed that the current reduction of excise duty on petrol and diesel will continue, having been earmarked to be scrapped by the end of February.
This could have seen fuel prices shooting up drastically overnight – petrol would have increased by around 23 cent per litre and diesel by 18 cent, prompting fears of potential fuel shortages as motorists scrambled to refuel in advance of the hike.
Now, there will be a ‘phased restoration’ of the excise fees over the next eight months:
- On 1 June petrol will increase by 6 cent per litre, diesel by 5 cent per litre, and green diesel by 1 cent per litre.
- On 1 September these rates will increase by a further 7 cent for petrol, 5 cent for diesel, and 1 cent for green diesel.
- 31 October will see a final increase of 8 cent for petrol, 6 cent for diesel, and 3 cent for green diesel.
There are two VAT decreases (or extensions) to note in the most recent supports.
The most positive is undoubtedly the continuation of the VAT decrease for gas and electricity, which was first slashed from 13.5% to 9% in May of 2022. This reduced VAT rate has been extended until 31 October, which will no doubt be welcomed by energy customers who are still faced with record high prices.
However the decision to extend the hospitality industry’s reduced VAT rate has proven to be controversial. The discounted rate of 9% will continue until 31 August and will cost the exchequer around €300 million. However many have wondered whether that money would be better spent elsewhere.
The Government has insisted that this will be the last VAT extension for the hospitality sector, amid criticisms of rewarding hoteliers who have advertised record-high room prices across the country.
The Temporary Business Energy Support Scheme (TBESS), which aims to help businesses with soaring energy costs, will be extended until 31 May and the rules have been relaxed to allow more businesses to qualify.
The threshold for energy cost increases will be reduced from a 50% increase to a 30% increase. This will be backdated to 1 September 2022.
The relief for energy cost increases will also increase from 40% to 50%, while the payment will increase from €10,000 to €15,000 per month. The overall cap will increase from €30,000 to €45,000.
A grant for businesses using kerosene or LPG was confirmed, but no further details of its implementation or conditions have been announced.
What’s missing from the new supports?
Surprisingly, there were no extra payments or tax breaks for mortgage holders or renters. Renters received a €500 rental tax credit in Budget 2023, but no further supports have been made available.
In addition, there was no confirmation of any extra energy credits after the third and final €200 credit which will be paid in March. Ministers intimated that this would be reviewed closer to Budget 2024.
With inflation holding steady but still at around 7%, many might have been hoping for a punchier package to ease the financial burden for the next few months.
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What do you make of the new cost-of-living measures being introduced? Are you in favour of them? What else should be done to combat rising inflation and costs for consumers?