One-off windfall tax revenue should be invested in infrastructure
The Government’s Stability Programme Update raises major challenges for Ireland on infrastructure, taxation and income distribution. Social Justice Ireland believes a new approach is required if these challenges are to be addressed effectively. Social Justice Ireland renews our call on Government to invest one-off windfall tax revenue into one-off investment in addressing our infrastructure deficits. The most appropriate starting point is our social housing deficit.
Stability Programme Update 2023
As the Stability Programme Update shows, Ireland may be comparatively well off in some areas; however, there are substantial inequalities that must be addressed. There are alternative and better ways of managing and organising economic activity that would ensure a better standard of living and wellbeing for everyone in society. A new approach is required, one that supports key community values and delivers a new social contract – an Ireland with a vibrant economy, thriving communities, affordable housing, access to healthcare when required, access to education for all, transparent and good governance and sustainability.
- Social Justice Ireland renews our call on Government to invest one-off windfall tax revenue into one-off investment in addressing our infrastructure deficits. The most appropriate starting point is our social housing deficit.
- Government has yet to outline a plan to reform our current taxation system in advance of the changes to the global tax landscape as part of the OECD BEPS process.
- As well as moving towards a Minimum Effective Corporate Tax Rate, this reform broadening our tax base and committing to increasing our total tax take by €3bn per annum.
- Increasing the overall taxation revenue to meet this new target would represent a small overall increase in per capita taxation levels and one that is unlikely to have any significant negative impact on the economy. However, reaching that level would provide a lot more recurring revenue for the state to invest in public services and improved living standards for all.
- A just tax system is essential if Ireland is to address the reality that investment is essential for a number of reasons: a) to secure economic development; b) to protect communities (with initiatives such as Community Healthcare Networks); and c) to ensure critical infrastructure deficits such as housing are addressed.
- Investment in housing must be prioritised given the impact is has on all areas of the economy and society. Government has failed, to date, to recognise the scale of the housing crisis in Ireland. The on-going failure of Government policy in this area for more than a decade has produced a crisis of unprecedented proportions across much of Irish society with housing affordability continuing to present a serious challenge.
- In addition to the affordability crisis, where the cost of buying or renting a home remains out of reach for many, we also have a persistent homelessness crisis, with the number of people accessing emergency homeless accommodation exceeding 11,700 in February 2023.The solution to these problems is investment in appropriate supply, rather than over-reliance on subsidies which artificially inflate housing costs.
- Social Justice Ireland estimates the real number in social housing need is closer to 133,000. To meet the needs of these households Government would need to double Ireland’s social housing stock by 2030.
- Investment in sustainable public transport is essential to support our transition to a green economy and to give people viable alternatives to private car journeys as we work to meet our climate targets. The initial investment in public transport will be substantial if it is to have the necessary effect, but the long-term social, environmental and economic benefits of such a change would greatly outweigh the cost. It is vital that the upgrade to the public transport network has a strong focus on connectivity to ensure that people travelling from rural or regional areas to urban centres are encouraged to do so by public transport.
- Investment in renewable energy is essential, the impact of the current energy and cost of living crisis has highlighted how a move to renewable energy must be an immediate policy and investment priority. An upgrade of the national grid must be a key element of this infrastructure investment so that communities, cooperatives, farms and individuals can produce renewable energy and sell what they do not use back into the national grid, thus becoming self-sustaining and contributing to our national targets.
- Ireland faces some critical decisions on climate mitigation and investment in the next seven years. The significant investments and policy change required to meet our national and international climate commitments will need to be frontloaded in the next two to three years to support emissions reductions later in the decade if we are to have any chance of meeting our 2030 targets. This means massively upscaling investment in a wide range of mitigation and adaptation strategies, rapid and far-reaching transitions across all sectors, which although politically challenging are necessary, further delay will simply see the small window of opportunity we have close.
- In 2023, those who are most vulnerable have seen the real value of their incomes fall. This is totally unacceptable. Core social welfare rates must be benchmarked and indexed against average weekly earnings. Government continues to rely on one-off measures to try and address income inadequacy rather than increasing core social welfare rates.
- Budget 2024 must see core social welfare rates benchmarked to 27.5 per cent of average weekly earnings and indexed to average weekly earnings thereafter, with a pathway over time to reach a benchmark of 30 per cent.
- Government must demonstrate to those on low incomes that it can and will support them as they deal with increased costs on an ongoing basis.
- The increased cost of living is affecting everyone in society, but it is having a devastating impact on households dependent on fixed incomes.
- Maintaining adequate levels of social welfare is vital to ensure that we do not see an increase in poverty and deprivation. If those dependent on social welfare are not to fall behind the rest of society at times of economic growth, the benchmarking of welfare rates to 27.5 per cent of average wage rates is essential.