Policy issues concerning Government

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.
 

Budget 2021 should be socially progressive and promote wellbeing.  This is key to a fair and inclusive recovery as we learn to live and work in a Covid-19 world.  Budgets represent what a government values and how they intend to meet their objectives. For Budget 2021 to be socially progressive it must ensure that nobody is left behind.  While developing a thriving economy is essential, it cannot be delivered without simultaneously working to provide decent services and infrastructure, just taxation, good governance and sustainability.

Budget 2021 follows a series of budgets over recent years that have frequently given emphasis to providing reductions in income taxation. Here we compare the total annual value of these reductions between 2014 and 2020.  

Government should increase in core social welfare rates of €7 per week in Budget 2021 and set a three-year target for Government to reach the benchmark of 27.5 per cent of average earnings.  In the forthcoming Budget Government should also complete the equalisation of Jobseeker’s rates for young people under 26, introduce a cost of disability allowance and introduce a universal state pension.