Invest in people by increasing welfare and cutting tax breaks

When the economic crisis hit in 2008, the budget of the Department of Social Protection was first in the firing line. Bodies such as IBEC went to war on welfare, claiming the budget was €20bn.

The true cost is less than half that. Thirty percent of welfare expenditure returns immediately to the exchequer, in VAT and excise duty. The old-age pension is not a welfare payment: It is a right, and responsibility. The same might be said about rent allowance.

Government budgetary policy is: The poor pay for the sins of the rich. The extension of the contentious property tax to welfare recipients is likely unconstitutional.

Far better for Finance Minister Michael Noonan to focus on our high level of tax breaks (three times the EU average) than to cut subsistence welfare payments. Those tax breaks, in tandem with a low corporation tax rate, add up to serious budgetary irresponsibility, which we may regret.

The property investment lobby has had its way, and house prices are rising again, particularly in Dublin, as another generation of Irish young people is betrayed.

Of all the cuts, the denial of the Christmas welfare bonus is the most reprehensible. Hard-pressed people in disadvantaged areas have had to turn to moneylenders to have any kind of Christmas. They will do so again, in a few weeks’ time, to get their children back to school.They will even be asked to contribute to the heating costs of their children’s schools. The minister for finance must increase welfare payments. He must also end the Section 23 tax break.

These actions would send out an important message: Investment in people pays much higher dividends than investment in property.

David Freeley

Beechville

Clonard

Wexford