Budget 2015 was regressive as it further widened the gap between the rich and the less well off, writes Seán Healy.
Budget 2015 is the fourth regressive budget in a row. While it contains a number of welcome initiatives and developments, overall it is disappointing.
Over €1bn was allocated in tax cuts and expenditure increases but the choices made by Government show a profound lack of a coherent, guiding vision. It was a budget of missed opportunities. It lacked the long-term focus on real recovery that this particular moment required.
It failed, in effect, to even set out a clear pathway forward that would promote the common good.
Budget 2015 widened the rich-poor gap by €499 a year. This measures the gap between the disposable income of a single unemployed person and a single person on €50,000 per annum. If compared with people on higher salaries the rich-poor gap has widened even more.
It gave €0.90 a week increase to an unemployed single person, while giving €14.30 a week to a single person earning €75,000. In the case of couples, the unemployed got €1.51 a week (€78.52 a year) extra while a couple with two earners on €125,000 will receive an extra €23.57 a week (€1,225.64 a year) as a result of the budget changes.
Full details of these calculations are available in Social Justice Ireland’s detailed Analysis and Critique of Budget 2015 which may be accessed at www.socialjustice.ie
There were a number of welcome initiatives including the increase in child benefit and the increased allocation in areas such as social housing and health. The recognition of the need for multi-annual planning in a few areas is a very welcome development. For example, the promise of a new Plan for Social Housing to be published within weeks is a move in this direction even though the overall target of 30,000 new homes over several years falls far short of what is needed in a country with a growing waiting list which is currently over 90,000 households.
The recognition of the need for the health budget to be adjusted over a two-year period is a welcome development within a budget that shows a modest increase in funding for 2015. A concern in this area is the lack of any evidence that provision has been made for demographic changes and the consequent increasing number of older people and people with disabilities needing care.
The budget fails dramatically to address the working poor issue. These have been among the worst hit in the period since 2008. Government will claim that they did as much as they could with the resources available. However this is not the case.
The total cost of the income tax and USC adjustments was €642m. The distribution of the benefits resulting from Government’s choices was skewed in favour of the better off and dramatically widened the rich-poor gap.
The decision to end the ‘Double-Irish’ tax scheme was long overdue and is very welcome. However, €95m in tax breaks was given to the corporate sector. This was an extraordinary decision which fails to recognise that Ireland’s low overall tax-take is not sustainable.
It also fails to recognise that corporations, irrespective of their size or significance, should contribute a reasonable proportion of their profits in taxation-such as small and medium enterprises (SME) do.
For the same cost the Government could have chosen a much fairer set of alternatives as follows:
Refunding the unused proportion of PAYE and personal tax credits to those who are active in the labour market but earn insufficient income to use up all those tax credits (i.e. introduce a system of refundable tax credits) – full year cost of €140m.
Increase the personal tax credit for all earners by €175 a year – full year cost of €400m. This would provide an increase in income of €175 to all single earners and couples with one earner across the system. Couples with two earners would gain twice this amount, €350 per annum. In contrast to the budget outcomes a single person earning €25,000 would gain €175 a year while a single person on €75,000 would gain the same.
The scale of the challenge:
- Ireland is facing many challenges as it moves forward.
- More than 750,000 people live in poverty, including almost one in every five children.
- Almost 150,000 people are long-term unemployed.
- There are more than 90,000 households on waiting lists for social housing.
- Healthcare waiting lists are continuing to grow.
- Net migration was minus 21,000 in the year to April 2014 (most recent data) while net migration of Irish nationals in 2008-2014 was minus 120,000.
These and many more challenges needed a budget that mapped out a road to real recovery. That was what the present moment required.
Social Justice Ireland believes that Ireland should be guided by a vision of becoming a just society in which human rights are respected, human dignity is protected, human development is facilitated and the environment is respected and protected.
The core values of such a society would be human dignity, equality, human rights, solidarity, sustainability and the pursuit of the common good. This vision and these values were sadly lacking in Budget 2015.
Seán Healy is director of Social Justice Ireland
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