Fine Gael today claimed that introducing a VAT cut would help get the economy back on track.
The party is advocating an immediate 1 per cent cut in the 13.5 per cent VAT rate to lower prices and cut costs, saying the move would give an economic boost amid a serious economic downturn, persistent high inflation, rising job losses and tough pay talks
Fine Gael said the VAT cut would be financed through a windfall gains levy on electricity generators that it claimed stand to make €1.6 billion over the next four years by charging more for electricity to pay for carbon allowances.
The Government has allocated these carbon allowances free of charge until 2012, the party added, “meaning power generators will make around €300 million a year in unearned profits on the backs of businesses and consumers”.
Commenting on the proposal, Fine Gael leader Enda Kenny said the Government “stubbornly refuses” to recognise the seriousness of the economic slide, “or persists in blaming external factors”.
He claimed that the VAT cut was a revenue neutral way of cutting VAT and helping push down prices and costs. “These are the types of real and tangible measures that a responsive and focused Government can and should be making.”
Richard Bruton, finance spokesman, added: “It will be very difficult for the social partners to achieve a moderate pay deal which is so essential at this time - this proposal would help secure a deal”.
The policy announcement in Dublin was also attended by Simon Coveney TD, the party’s communications, energy and natural resources spokesman.
