Budget skewed in favour of better-off, says Social Justice Ireland

Government’s choices ‘disturbing’ given scale of crises in healthcare and housing

A single person earning €75,000 will gain almost five times more from Budget 2018 than a single person on €25,000, according to Social Justice Ireland (SJI).

Fr Seán Healy, director of the think-tank, said the choices made by Government in the budget were “skewed” in favour of the better-off in a way that was “disturbing”.

Presenting the group’s annual budget analysis, he said that unless there was a “fundamental change in Government thinking” on housing and poverty, there would be “homelessness and child poverty for years to come, and they will be rising”.

The 24-page document, prepared overnight following publication of the budget, refers to “low tax, low investment, low ambition”, saying that given the scale of the social crises, in low pay, healthcare, education and housing, “the decision to cut income taxes seems both perverse and contradictory. Irish people deserve better than this.”

It says changes in the Universal Social Charge and income tax “provide larger gains to those on higher incomes compared to those on lower incomes.

“For example, a single person earning €25,000 gains €65.87 per annum while a single person on €75,000 gains almost five times more, €328.46 per annum.

‘No gains’

Low-paid workers “will experience no gains from the increase in the threshold for entering the top tax rate and experience limited gains from the reduction in the USC. As working households they do not receive any welfare benefits.”

For example, it says, a full-time worker on €11.70 per hour (€23,800 per annum) will receive only €1.20 per week . In contrast, a worker earning three times as much, €72,000, will gain €6.30.

By international standards Ireland has very high rates of low pay, with 24 per cent of full-time employees on €24,000 or less per year. Among OECD countries, just Colombia (25.3 per cent) and the United States (25 per cent) have a higher proportion of low-paid full-time workers.

“Very many of these workers received little or no benefits in Budget 2018.”

Though the minimum wage was increased by 30c, to €9.55 per hour, this rate still leaves these workers €2.15 short per hour of the €11.70 living wage.

For the same amount of money (€397 million) it has cost Government to change tax and USC rates in the Budget, it could have tackled this in-work poverty, says SJI.

Personal tax credit

It could have introduced “refundable tax credits” where workers who don’t earn enough to gain from tax credits gain the value of them. In addition, the personal tax credit for all workers could have been increased by €100 per year.

While welcoming the across-the-board, €5 per week increase in weekly welfare payments, SJI warns the value of welfare payments has fallen over recent years.

“In the broader context of widespread pay increases and tax cuts, there is potential of the relative position of welfare recipients to disimprove. If divides open up, as in the late 1990s, poverty for this group will rise.”

The continued different treatment of young unemployed – those under 26 get lower rates of Jobseeker’s Allowance – was discriminatory, said Fr Healy.

“Frankly, I don’t accept that it’s an appropriate way to deal with young people,” he said.

“Every year the budget is about choices, and choosing to allocate resources in a particular way. Budget 2108’s failure to address some of the major challenges Irish people currently face such as the housing crisis or the incidence of Ireland’s low pay on anything like the scale required, is disappointing.”