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Change fiscal rules to invest in fairer Ireland – SJI

By Ann Marie Foley - 19 July, 2017

“Budget 2018 should be designed so that it is both economically sound and socially fair. These twin objectives are both realistic and achievable. However, they need to be underpinned by a clear policy commitment to achieving both” – Dr Seán Healy.

Social fairness in Budget 2018 is achievable, according to Social Justice Ireland (SJI).

However, fiscal space (funds) available for the budget should be supplemented with savings within the current budget, tax changes to make the system fairer, and new funds made available through special purpose vehicles (separate legal entities from government created to fulfil specific or temporary objectives) as required, stated SJI.

It also called for fiscal rules to be changed to allow a country like Ireland to close the gap in poor infrastructure that contrasts dramatically with wealthy European neighbours.

SJI outlined the stark reality in Ireland that in spite of something of an upturn in the economy, there are still over 100,000 fewer jobs in Ireland than a decade ago. Jobs that are insecure, often low-paying, and in which risks and costs of work shifted from employers and the government to workers, or ‘precarious employment’, have emerged as a serious worry for individuals and families.

A quarter of Ireland’s population (1.2 million people) are experiencing poverty or social exclusion. Of these, 308,000 are children under 16. The urban/rural divide is widening.

SJI in its *proposals for Budget 2018 highlighted the need for extra money to increase investment in infrastructure and to address major problems in public services.

“Budget 2018 should be designed so that it is both economically sound and socially fair. These twin objectives are both realistic and achievable. However, they need to be underpinned by a clear policy commitment to achieving both,” stated Dr Seán Healy, Director, SJI, at the launch.

“Most Irish people want to see an end to homelessness, social housing shortages, hospital waiting lists and child poverty. They want to see the lack of affordable childcare addressed, investment in rural broadband, and much more. These should be the priority targets of Budget 2018,” said Dr Healy.

He added that Ireland will not solve all of these major challenges in one budget or in a single term of office of any government – that will take a decade or more if there are priorities and sequencing.

Dr Seán Healy, Director, SJI

SJI suggested that in the next budget the government should start with infrastructure shortcomings including the lack of social housing and rural broadband.

Services that need to be prioritised are health care and education, and development of the economy should be supported by investing in affordable childcare.

Michelle Murphy, Research and Policy Analyst, SJI, highlighted that: “The scale of the challenge is such that all available resources in Budget 2018 should be invested in infrastructure and social services. Any tax reductions should be funded by tax increases in other areas.”

She added that if Ireland’s economy is to thrive it needs a well-educated and healthy labour force and added: “It needs people who feel they have a stake in society. They need to be confident that their well-being and the well-being of their families are a central concern of government. They need to be confident that the tax system is fair and that they have a real voice in shaping the decisions that impact on them.”

The government should focus on increasing Ireland’s tax-take over the next few years, and given the historically low levels of taxation SJI believes an increase in the overall tax-take is more than feasible.

For example, raising the overall tax-take by 3 percentage points of GDP would be a small overall increase, which, if properly structured, is unlikely to have any significant negative impact on the economy in the long term. The yield from such an increase would average €9 billion per annum in additional taxation revenue between now and 2021.

In its proposals for infrastructure SJI calls for:
-€500m for social housing, and access to low cost finance to build social housing.
-€450m for rural and regional broadband, transport, and enterprise and training.
– €327m extra in health for primary and social care, home care packages and disability services.
-€515m to help employment by increasing PAYE tax credits and refunding credits to low paid workers.
– €134m extra for skills development and training.
– Social Welfare package including €5 more per week in social welfare payments and Disability Allowance.

In its tax reform proposals SJI calls for: minimum effective corporate tax rate of 6 per cent; restoration of 13.5 per cent VAT rate to accommodation sector; and a levy on undeveloped sites and empty homes.

*Budget Choices policy briefing which sets out fully-costed proposals on expenditure and taxation for Budget 2018.

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