EXPECTATIONS AROUND TAX cuts for workers are being tempered by those in government against the backdrop of uncertainty over the impacts of US tariffs. 

Speaking at ahead of the National Economic Dialogue in Dublin Castle today, Finance Minister Paschal Donohoe said all government parties have committed to delivering changes to VAT for the hospitality sector. 

Meanwhile, the Taoiseach said initiatives such as the introduction on a two-tier Child Benefit scheme are “not off the table”. 

However, he added that as Budget decisions are made in the coming months, certain decisions will mean there are “other things we can’t do”. 

Donohoe said he is confident of the country’s position in terms of stability in terms of our public finances, but said “our first priority is to look at how we can support jobs, invest in infrastructure and keep our public finances safe”. 

“If we decide that we are going to make a particular set of decisions and investments, that means there are other things that we will not do,” said the minister. 

Department of Finance data published last year stated that cutting the VAT rate to 9% for the entire hospitality sector would cost €764 million annually.

A cut in the VAT rate for hospitality “is a shared priority across government”, Donohoe said today. 

Delivering more infrastructure and building more homes is going to be a key feature of the Budget, he added.

“What I just want to ensure is that any decisions that we do make are ones that are affordable and well defined,” said Donohoe, who told reporters he would work with Public Finance Minister Jack Chambers to deliver a “safe and sensible budget” in October. 

Tánaiste with Finance Minister Paschal Donohoe and Public Expenditure Minister Jack Chambers. Alamy Stock Photo Alamy Stock Photo

Commenting on a possible VAT reduction, Tánaiste Simon Harris said today:

“So when you say you’re going to reduce the VAT rate in the hospitality sector, that costs a significant amount of money. We’re very serious about that pledge. It was a solemn commitment, because it’s not about a tax cut for businesses, it’s about recognising that in every town, in every village, there are small businesses creating employment that want to be able to keep going and need to be supported.”

Harris said there’s lots of ways to help people with the cost of living, and tax is one instrument that can be used.

“There are lots of other ways in terms of how the state can reduce costs. But also the best way you help people is by making sure they have a job,” he added.   

Speaking at the same event, Taoiseach Micheál Martin said Budget consideration this year, and into the future, will have to happen against the backdrop of the possible impact of US tariffs. 

“There’s no doubt that the tariff situation does create a different context leading into this budget and future budgets. Until it’s resolved and until certainty is restored, then it will be challenging,” he said. 

While the Taoiseach said he did not want to speculate on any potential tax breaks for property developers, Martin said “very significant priority” will be given to the housing issue in the upcoming Budget. 

“Housing remains the number one priority in all of our plans, budget, national and the development plan,” he added. 

The National Development Plan, due this summer, will be key, he said, stating that creating certainty in policy to attract private sector investment is going to be crucial.

Two-tiered Child Benefit plan ‘not off the table’

When questioned about the possibility of a two-tiered child benefit scheme being introduced, the Taoiseach said “nothing is off the table”.

The Taoiseach said he had spoken to the Social Protection Minister Dara Calleary around more targeted supports in response to the child poverty issue, stating the government is “examining all options”. 

The programme for government commits to exploring a targeted Child Benefit Payment and how it would interact with existing supports such as the Working Family Payment and Child Support Payment.

In his speech at the event today, Martin referred to a recent report on child poverty which was published last week, stating that government needs to ensure this increase turns out to be a temporary spike out of line with the overall trend. 

“Therefore, for Budget 2026, I’ve asked my ministerial colleagues to plan and to come forward with measures that will really make the difference to the most vulnerable families and children and to target resources appropriately,” he added. 

Speaking about the looming deadline on talks between Europe and the US on tariffs, the  Tánaiste said the European Union has made a series of proposals to the United States that would help move things forward. 

Harris, who has previously spoken about concerns Ireland has in relation to any countermeasures that might be imposed by Europe, said he will be speaking with the EU Trade Commissioner Maroš Šefčovičlater today. 

All budget discussion will be taking place “against a backdrop of a very volatile trade environment and we shouldn’t lose sight of that,” said the Tánaiste.

“What is absolutely clear is you want to continue a budgetary strategy in October that is sensible in planning for a variety of eventualities. 

“We have full employment in this country, that’s quite a rare thing to have in many, many countries.We can’t take it for granted. Keeping people’s jobs and delivering investment have to be the priority,” said Harris.