A political clash has emerged between Fine Gael and Fianna Fáil over proposed VAT rates, with significant implications for Irish households’ energy costs. The dispute centers on Fine Gael’s plan to reduce VAT rates to 11% for the food and hospitality sector, which Micheál Martin warns could inadvertently force up energy prices from their current 9% rate.
Fianna Fáil has committed to maintaining the 9% VAT rate on gas and electricity for the next five years, arguing that any increase would burden households already struggling with high energy costs. Recent Eurostat data shows Irish households are paying the second-highest electricity rates in the EU, approximately €500 more annually than the European average.
Taoiseach Simon Harris has moved to calm concerns, promising additional cost-of-living measures are forthcoming from Fine Gael. “There is more to come in our cost-of-living measures because we’re absolutely committed to helping people with electricity and energy bills,” Harris stated.
Meanwhile, Fianna Fáil’s manifesto includes plans to benchmark energy network costs against other OECD countries and investigate the speed at which wholesale price reductions are passed to consumers. The party also proposes reducing the Public Service Obligation levy on electricity bills by up to €100 through direct Exchequer funding.
Currently, Irish households receive two €125 energy credits as part of this year’s budget measures to help offset high energy costs.