Taoiseach Leo Varadkar has given the strongest indication to date that the reduced VAT rate on hospitality, excise cuts on petrol and diesel, and tax reductions on electricity and gas will be phased out.

Speaking in Limerick today, he said: "Inflation is slowing down, but the cost-of-living remains very high and is putting a lot of families and businesses under pressure.

"We want to help and the package will be about helping businesses with their energy costs and families who are really struggling and people who are most vulnerable, who are on fixed incomes like pensioners and social welfare.

"But we need to be frank with people - it is not going to be a mini budget … the €11bn budget is only a few months ago and those measures are still being rolled out."

Mr Varadkar added: "The temporary tax cuts such as those on excise, VAT on hospitality and on electricity and gas that were put in place were temporary and they will need to be phased out over the course of the year, and we will be setting out how that will be done.

"We were always very clear they were temporary and were not budgeted for and will have to be phased out."

Cabinet set to approve measures on Tuesday

Leo Varadkar said the Government were 'always very clear they were temporary'

Mr Varadkar stressed that the package of measures to help with the cost-of-living had not yet been finalised, but will be agreed by the Cabinet on Tuesday.

The hospitality industry has been lobbying to retain the reduced rate of 9% VAT, but many within Government expect it will return to its original rate of 13.5%.

Excise on petrol was reduced by 21 cent a litre and diesel by 16 cent a litre. That rate is due to expire at the end of this month, but there is an expectation that support will taper off.

Green Party Leader Eamon Ryan said it makes sense to wind down supports and he had a good meeting last night with Government colleagues.

Speaking in Tullamore, he said it was important to target supports at those who most need them and said "we'll have to 'til next week when Government will finalise the full details".

He added that research for his Department of Energy found that groups such as lone parents are particularly struggling.

In the Budget, the Government said the VAT on electricity and gas would remain at the reduced rate of 9% until 28 February.

It is now expected the Government may move to extend that low rate on Tuesday following the Cabinet meeting and set out a timetable to phase out the lower rate and ultimately return to the original rate of 13.5%.

Ministers are concerned that immediately halting the support would be too much for many households.

It is likely to be extended for some months.

The Budget, which was announced in October, was designed around the reduced rate of VAT ending on 28 February, but did not allow funds for the supports to be extended.

However, Government is also expecting to recoup potentially hundreds of millions of euro from a windfall tax on energy companies, which will help offset costs of measures which will be announced next week.

In the Dáil this week, the Taoiseach indicated that State-owned energy companies would announce strong profits after a big increase in commodity prices.

Tuesday's announcement is also expected to include measures to help low-income families.

'Targeted interventions'

Pearse Doherty said measures from Government need to be targetted

Meanwhile, Sinn Féin's Finance Spokesperson Pearse Doherty TD said that the fuel excise duty reduction must be maintained until the end of May at least, because fuel prices are still bearing down very hard on workers and families.

The Donegal TD said the Government needs to target as much of the measures as possible at those who are suffering with a spring bonus, and by supporting pensioners, carers, people with disabilities and those on social welfare.

"We also need to see mortgage interest relief for those who are paying €4,000 and €5,000 more; we need to see a spring bonus and core social welfare rates increases," he said.

In terms of business funding, Mr Doherty said there was a package of €1.2bn in supports yet only €30m has been drawn down and that scheme needs to be redesigned.

In relation to the VAT rate in hospitality, Mr Doherty said Sinn Féin has called on the Government to publish its analysis of what the non-extension of that rate would mean.

"I put it to the Government this week that one in ten people who were surveyed by Barnardos have gone to food banks last year and that one and three have gone without meals," Mr Doherty said.

"There needs to be other measures that are more universal, because we recognise that the cost-of-living pressures are bearing down on many, many families."

CEO Vintners' Federation of Ireland Paul Clancy warned the Government that a return to the 13.5% VAT rate could lead to job losses.

Speaking to RTÉ's Drivetime, Mr Clancy said that the VAT increase could potentially be passed on directly to the consumer through price hikes.

"This proposed increase in VAT from 9% to 13.5% will just reduce the spending power of customers and potentially drive inflation and lead to job losses," he said.

Mr Clancy added that there are 270,000 jobs in tourism throughout the country and 40,000 of those are in the pub trade.

Additional reporting Cathy Halloran, Colman O'Sullivan and Eileen Magnier