You are here

Policy issues concerning Fiscal Policy


The Government’s Stability Programme Update raises major challenges for Ireland on debt, infrastructure, taxation and services.  Social Justice Ireland believes a new approach is required if these challenges are to be addressed effectively.


The past fifty years has been a period of falling taxes on the rich in developed economies.  A report by the London School of Economics and Political Science has found that reducing taxes on the rich leads to higher income inequality and has little or no impact on economic growth or unemployment.  The report finds major tax cuts for the rich since the 1980s have increased income inequality without any offsetting gains in economic performance.   It concludes that governments seeking to restore public finances following the COVID-19 crisis should therefore not be concerned about the economic consequences of higher taxes on the rich.
 


At the European level, what the pandemic has cast doubt on is the very fundamentals of European integration. The main features of the European Union, what could be described as its “pillars”, are these: the single market and freedom of movement, the euro and the Stability and Growth Pact, and competition and state-aid law. We can already look ahead and see that the post-crisis EU could be standing on very different foundations if the questioning of the three basic pillars continues over time or, conversely, it could just as easily go back to its old ways.  What will the world environment in which this happens be, though? Here there are four possible scenarios emerging.

The National Economic Plan - to be published on Budget day - must give equal weight to environmental, social and economic considerations. Otherwise, this Government will simply repeat the mistakes of the past and many will be left behind.  The National Economic Plan must be underpinned by a new social contract that treats our environment, society and economy equally

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. 


The estimated cost of the overrun of the budget for the National Children’s Hospital currently stands at €450m.  Details have emerged of where the €99m to cover the cost of the National Children’s Hospital overrun in Budget 2019 will come from.   This will have an impact across a number of Departments and projects in 2019 and comes with a social and economic cost as well as a political one.  Government has yet to identify where the remainder of the €350m to cover the cost overrun will come from.  This information should be made available to the Oireachtas as soon as possible.

The cost of the new National Children’s Hospital which has almost doubled in four years will have significant knock on effects on the rest of the health service. Who is ultimately going to pay for the cost overruns?

Some tax proposals currently being considered by Government should be rejected because they would give far greater benefit to people earning higher incomes than to lower income employees according to a new study conducted by Social Justice Ireland.

Social Justice Ireland's recent book entitled Basic Income: Radical Utopia or Practical Solution? has received an award for original work in Irish Fiscal Policy from Ireland's Foundation for Fiscal Studies, Fiscal.ie.

Ireland’s social contract is broken.  The legitimate expectations of citizens are not being met.  This is most obvious in areas such as housing and homelessness, a two-tier healthcare system, an ongoing failure to provide rural broadband and high levels of poverty and social exclusion, especially among children.  2017 is the first year of a new century for Ireland and now is the perfect opportunity to develop a new and radical social contract for Ireland’s second century. 

Pages