The Government is considering whether it should delay introducing a VAT reduction for the hospitality sector until the middle of next year.
It is understood the aim would be to create the fiscal space for more tax cuts in next October's budget.
The Coalition's Programme for Government contains a commitment to reduce VAT on the hospitality sector, at a cost of around €1 billion.
During the Covid pandemic, VAT on hospitality was reduced from 13.5% to 9%.
Minister for Finance Paschal Donohoe said last Tuesday that the measure would account for two-thirds of the allocation of identified tax cuts this year.
It is now being assessed if the measure could be delayed until 1 July 2026, a move first reported by the Irish Times.
Ministers are also said to be assessing if it is possible that the lower VAT rate of 9% would be extended only to hospitality and not to the accommodation sector.
However, nothing has been agreed on either measure so far.
Minister of State at the Department of Justice and Fianna Fáil TD for Limerick County Niall Collins said that across the board reduction in VAT for the hospitality sector is not targeted, while he would prefer to see targeted interventions in a number of sectors.
Speaking on RTÉ's Today with Philip Boucher Hayes, he said he recognised that the hospitality sector is under pressure and jobs need to be supported and that the Programme for Government is clear in terms of recognising that, as well as SMEs and retailers.
He said that he felt there was room for tax cuts in the tax package and that it was his understanding that the Government would seek to bring forward measures such as changes to VAT and PRSI and other measures.
He said that going from 13.5% to 9% VAT would be an enormous cost in one jump and it was not the case that this has been agreed already.
He added that the process of negotiation and agreement will involve trade-offs and discussion but that the Government was just at the start of the process.
Minister Collins said the priority is to help people who need the most help and also to help younger and vulnerable people such as those with disabilities.
He pointed out that previously when there was a VAT reduction for hospitality, there was no evidence that this was passed on to the consumer when it should have been.
He said that he did support the idea of supporting the hospitality, SMEs and retail sectors into the future, but can it be done correctly is the question.
He said there is agreement within Government that vulnerable jobs need to be protected but there is incorrect commentary around the VAT issues.
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'A lot of businesses are vulnerable' - Vintners Federation
Pat Crotty, Chief Executive of the Vintners Federation of Ireland has said that something has to change in relation to Government support for hospitality, or else more pubs will close their doors for good.
Speaking on the same programme he said that it will always be the case that not everyone in hospitality needs assistance, but that there is a huge disparity between the capacity to do business and make a profit, depending on where the pub or restaurant is in the country.
Mr Crotty said the price of a drink or a lunch is low in rural areas compared to Dublin and that even busy pubs are threading water and doing well to break even, but that a lot of businesses are making a loss.
"A lot of businesses are vulnerable," he said.
