Distribution of Tax and Benefit Changes, 2017-2021

Posted on Friday, 9 July 2021
tax redistribution

Social Justice Ireland’s income model tracks the distributive impact of annual budgets on households across Irish society. As different priorities can be articulated for each Budget, it is useful to bring together the cumulative effect of policy changes across a number of years. On this page we consider the cumulative impact of changes to taxation and welfare over the four Budgets delivered by the last Government (Budgets 2017-20) and the first by the current (Budget 2021).

The households we examine are spread across all areas of society and capture those with a job, families with children (under 12), those unemployed, and pensioners. Within those households that have income from a job, we include workers on the minimum wage, on the living wage, workers on average earnings and multiples of this benchmark, and families with incomes ranging from €25k to €200k.

At the outset it is important to stress that our analysis does not take account of other budgetary changes, most particularly to indirect taxes (VAT and excise), other charges (e.g. prescription charges) and property taxes. Similarly, it does not capture the impact of changes to the provision of public services or or the many emergency  measures that have been introduced to respond to the Covid-19 emergency. As the impact of these measures differs between households it is impossible to quantify precise household impacts and include them.

Over the years examined, all household types record an increase in disposable income. Among those with jobs, the gains experienced range from €4.61 per week (for single workers on €25k) to over eight times as much, €37.97 per week, for a couple with 2 earners on €200k. Overall, across these households the main gains have flowed to those on the highest incomes. Among households dependent on welfare, the gains have ranged from €16.19 per week (single unemployed) to €43.55 per week (unemployed couples with 2 children).

The gains experienced by welfare dependent households explain much of the reasons why the levels of income inequality and poverty have fallen in recent years. Social Justice Ireland has consistently argued for the prioritisation of low income welfare dependent families in Budgetary policy and welcome these outcomes. However, we are concerned that recent Budgets have shifted away from this approach.