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Policy issues concerning Economy

Over one million people were in receipt of  COVID-19-related income supports as of May this year.  584,641 were in receipt of the Pandemic Unemployment Payment (PUP) and 473,500 people had availed of the Temporary Wage Subsidy Scheme (TWSS).  These numbers have been decreasing as the economy slowly starts to open again, those who needed to avail of loan repayment breaks and rent freezes will face likely financial distress.

The most competitive economies of Europe all collect substantially more tax than Ireland does. The evidence suggests that a low tax, low service strategy for attracting investment is short-sighted and that quality education, infrastructure and services are far more important.

A vibrant economy is most important if Ireland is to produce a fairer future for all.  To secure such a future requires us to learn from our mistakes in the past.   Solid policies are required that secure the best future for all. 

As we look towards the future and rebuilding our society and our economy the new Government must consider how we can ensure that our recovery package and investment priorities post COVID-19 help us build a sustainable society and economy, and also move us towards a just transition and meeting our climate targets by 2030.

COVID-19 will have many implications for Budget 2021.  Not least should be the recognition of the need for a functioning society for all underpinned and supported by a vibrant and sustainable economy.  Last year, New Zealand’s Government launched its first “wellbeing budget”, basing its allocations on wellbeing priorities for its citizens.  Speaking at the launch, the Finance Minister stated: “Success is making New Zealand a great place to make a living and a great place to make a life”.   Could such an approach work for Ireland?  We believe it could, and it seems that the parties discussing the formation of a new Government agree.  Here, we discuss some practical proposals that can be introduced in Budget 2021 that will deliver such a Wellbeing Budget. 

All plans for recovery from the present crisis must ensure that the economy and society are treated equally and addressed simultaneously.  Analysing the Stability Programme Update (SPU) recently published by Government and reflecting on the commentary on its implications, it is clear that Ireland is in danger of repeating the mistakes of the past.  One of the major lessons to be learned from the crisis of 2008/9 and the subsequent recovery is that giving priority to the economy over all else simply leads to some parts of society doing very well while great swathes are left further and further behind.

It is clear that tax policy will play a vital role both in the immediate Government response to support people and businesses, and in rebuilding our society and economy once the worst of the health impacts are contained.  The new Government has an opportunity to reform and broaden our tax base and lay the foundations to increase our total tax take now to ensure we are well prepared to meet any future shocks.  We have a once in a generation opportunity to build a new society, a new economy and a new country that reflects the lessons we have learned in recent weeks. 

Ireland and much of the rest of the world is facing into a major economic recession as a result of the coronavirus pandemic. The circumstances and causes of this recession are very different from those that caused the recession in 2008/2009, but there are still lessons that can and should be learned. One of those lessons relates to government’s fiscal response. Faced with a recession that will exceed any in living memory, government must act on a scale that exceeds anything implemented during the financial crisis of a decade ago.

The coronavirus pandemic is arguably the greatest crisis the world has faced in living memory. It has implications for several areas of policy, not the least of which is the economy. In the latest episode of our podcast, Social Justice Matters, we talk to Dr. Tom McDonnell, co-Director of the Nevin Economic Research Institute, about the Irish government’s response to COVID-19, what else might be needed to ensure a robust recovery when this pandemic subsides, and the lessons to be learned from this crisis.

If a country is setting social, economic and environmental goals, it is important that taxation policy supports these goals. Ireland needs to have a real debate, not just about the levels of services and infrastructure it wishes to have in the coming decades, but also how these are to be financed. Just Taxation is one of the five key priority areas examined in Social Justice Matters: 2020 guide to a fairer Ireland. This report analyses ‘Just Taxation’ as one of five key priority areas required to build a fairer Ireland in an integrated and sustainable manner. 

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