The Irish Times view on the Government VAT row: tensions ahead

Irish Times

3 days ago

With many Government ministers now scattered to the beaches and byways, attention to matters in Leinster House has turned briefly quiet. But the reverberations from a row over VAT on hospitality still linger, offering a taste of fractious budgetary debates to come in September.
The flare-up, pitting Fianna Fáil against Fine Gael, may seem familiar. It echoes the tensions seen earlier this summer over third-level college fees and once again highlights the uneasy balance at the heart of the Coalition.
The proposal to reduce the hospitality VAT rate to 9 per cent was a Fine Gael manifesto pledge that found its way, with caveats, into the Programme for Government. But enthusiasm for the measure is not universally shared.
Simon Harris, eager to demonstrate economic support for small business and the regions, has championed the move. However, his party colleague, Minister for Finance Paschal Donohoe, was notably blunt in the Summer Economic Statement. The cut, he noted, would consume nearly two-thirds of the pot set aside for tax measures.
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That alone was enough to raise eyebrows. More pointedly, Fianna Fáil's Minister of State Niall Collins described the proposal as an unnecessary concession to a 'price-gouging' industry. Fine Gael countered that hospitality is a major regional employer under pressure from rising costs. Both sides later sought to play down the public spat.
Coalition tensions are nothing new, but the nature of this disagreement suggests tougher debates to come. While calling the 2026 budget a 'hairshirt' one would be absurd, it is clear nonetheless that the era of fiscal generosity is drawing to a close. Trade-offs are inevitable.
One such compromise may involve delaying the reduction until mid-2026. That might provide enough breathing room for competing demands, though no one will be entirely satisfied.
In the end, the episode may be remembered as a sideshow to more serious economic challenges. Still, it has cast a light on the limits of coalition unity in an era of fiscal tightening.