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Covid-19

One of the impacts of the COVID-19 pandemic and the resultant economic ‘deep freeze’ it has resulted in has been a large reduction in harmful emissions.  This reduction while welcome is only temporary.  The challenge is to ensure that investment in our recovery also supports progress to our climate commitments.

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. 

The COVID-19 crisis will impose its heaviest tolls on the most vulnerable, nationally and internationally.  Our recovery must look beyond pure economic growth to a more sustainable society for all.

Social Justice Ireland welcomes the €40 million package of supports for Community and Voluntary Organisations, Charities and Social Enterprises announced by the Minister for Rural and Community Development on the 8th May.  However the funding challenges that the Community and Voluntary Sector has faced since 2008 have never been resolved and will be further exacerbated by the current crisis.  It is essential that Government appropriately resource this sector into the future and that it remains committed to the principle of providing multi-annual statutory funding. 

On Friday, 8th May 2020, the Central Statistics Office (CSO) published the results of its survey on the Social Impact of COVID-19. This, as might be expected, makes for concerning reading.  The self-reported well-being of the population as a result of the COVID-19 crisis was worse than in 2013, at the height of the impact of the 2008 Financial Crash, with just 12.2 per cent reporting a high life satisfaction rating in April 2020, compared to 31.4 per cent in 2013.  The report highlights again the need for a new Social Contract to pave the way for recovery from the impact of COVID-19 and beyond.  The impact of job losses on well-being, social inclusion and financial stress are severe and the changes in consumption, particularly the increases in alcohol and tobacco consumption, indicate a potential personal debt and health crisis that must be tackled if society is to function.  

The full cost to Ireland of the COVID-19 pandemic is as yet unknown.  Our unemployment rate was 16.5 per cent in March 2020 and the Stability Programme Update (SPU) estimates a possible general government deficit of €23 billion this year; and the Exchequer receipts for March 2020 were almost €1 billion lower than March 2019Social Justice Ireland recently published our briefing on policy options for Ireland’s Taxation System post-COVID 19.  Here we explore one option in particular, an increase in Corporation Tax.

To unravel the two-tier welfare system that has been temporarily created as a result of the COVID-19 crisis, and to truly deliver a fair and sustainable economy the new Government should develop a programme to index social welfare rates to the Minimum Essential Standard of Living over a five-year term. 

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. 

As we navigate through the global crisis caused by COVID-19, 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.  This policy briefing explores some options available to the new Government that would increase our overall tax take as a proportion of national income,  broaden our tax base, and deliver a tax policy that would support our social and economic recovery and a new Social Contract

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