Future proofing our public finances and public services

Planning is key to ensure we are well prepared for any future budgetary challenges that an ageing population and increasing dependency ratio present. Work must begin now on planning for a sustainable tax-take and wise investment of available funds into infrastructure and services to embed resilience.  Benchmarking social welfare rates against average earnings and setting a new tax take target on a per capita basis are two key reforms that would provide certainty for public finances, future proof public services and support delivery of reforms laid out in Future Forty.

Benchmarking social welfare rates against average earnings and setting a new tax take target on a per capita basis are two key reforms that would provide certainty for public finances, future proof public services and support delivery of reforms laid out in the Annual Progress Report and Future Forty.

Benchmarking social welfare rates against average earnings

• Benchmarking core social welfare rates to average earnings, together with progressive taxation policies, is essential in order for Government to deliver on its welcome Programme for Government commitment to run progressive budgets.
• We recommend 27.5 per cent of average earnings as an initial benchmark.  This benchmark should be used as the starting point in the development of an indexation system for social welfare rates.
• Indexation of core social welfare rates to earnings provides fairness, budgetary stability and fiscal certainty. 
• Committing to the recommended benchmark would progress actions 39 and 40 of the Roadmap for Social Inclusion and support reductions in poverty.
• Benchmarking and indexation of social welfare rates to earnings would provide certainty for public finances in the long term and for those reliant on fixed incomes.

A new tax take target on a per capita basis

• A new tax-take target on a per capita basis should be set by Government.  This target should increase each year in line with growth in nominal GNI*.
• Reaching an appropriate level would provide a lot more recurring sustainable revenue for the state to invest in public services and improved living standards for all.
• Increasing the overall tax take to this level would require a number of changes and reforms to the tax base and the current structure of the Irish taxation system.
• A substantial proportion of current total taxation revenue comes from corporate tax revenue and is highly vulnerable and volatile. This vulnerability underscores the need for a broad based and sustainable taxation system.  The first step should be a new tax take target on a per capita basis.

Future proofing public finances and public services

• Planning is key to ensure we are well prepared for any future budgetary challenges that an ageing population and increasing dependency ratio present. 
• Demographic change is already having a significant impact on the demand and delivery of social services and infrastructure, and this is set to expand in the years ahead. 
• Work must begin now on planning for a sustainable tax-take and wise investment of available funds into infrastructure and services to embed resilience.
• Alongside the fiscal pressures that demographic changes will bring, there will also be governance pressures. Every person should have a right to have a say in how and where infrastructure and services are delivered, and what policies are implemented to shape their communities.
• Adequate planning for existing and future population needs would ensure that existing communities have their needs met, and the additional resources required by an increase in the population of those communities has been considered.