A Fine Gael plan to unveil a mini-budget for business in the first 100 days of the next government has been dropped amid concerns about international instability and economic uncertainty.
In the last general election, the party pledged an €800 million mini-budget for business that would have comprised a reduction in the VAT rate for food-based hospitality, entertainment and hairdressers to 11 per cent, a PRSI rebate for small and medium-sized enterprises and a new energy grant scheme.
During government formation negotiations, party sources indicated that this was a key red line. The programme for government, published this week, promised VAT changes as part of the next budgetary process instead.
A Government source said a number of compromises had been made between Fine Gael and Fianna Fáil during negotiations, including around business. “The issue of changes to the VAT rate was a big one for Fine Gael during the talks,” the source said, adding that it had become “contentious”.
“There were compromises. Fine Gael gave a commitment that it would drop the mini-budget idea, with Donald Trump coming in and the uncertainty of where the economy was at. It was decided that having a mini-budget would give the wrong signal. There will be one budget and that will be in October.”
A second source said that during talks Fianna Fáil was supportive of the plan to cut VAT but there were disagreements around when such a cut would be introduced. The party was not in favour of doing this in a mini-budget, describing it as “madness” in a time of “global uncertainty”. The incoming government now intends to cut the VAT rate to 9 per cent for food-based hospitality, entertainment and hairdressing in the next budget.
Focus will soon shift to the make-up of the next cabinet, with Fine Gael leader Simon Harris expected to take up an expanded role in the Department of Foreign Affairs and Fianna Fáil leader Micheál Martin due to become taoiseach for the second time next Wednesday.
It has also emerged that the government plans to create three additional minister of State roles, bringing the number of junior ministers to a historic high of 23. Amending legislation will be required to allow for the extra ministers and for the appointment of a fourth super junior minister.
The State is bound by the constitutional restriction on 15 senior ministers, but the workload had grown significantly in these areas, a Government spokesman said.
Meanwhile, a row was sparked on Thursday over a bid by Independent TDs supporting the incoming government to sit on the Opposition benches to secure Dáil speaking rights.
Tipperary North Independent TD Michael Lowry has argued that he and other government-supporting Independents who will not get ministerial roles should be able to be part of a new Dáil “technical group”. This would allow them speaking rights including opportunities to raise issues with the taoiseach during Leaders’ Questions, something government backbench TDs do not get to do.
Sinn Féin TD Pádraig Mac Lochlainn said, however, that “you can’t have your cake and eat it”.
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