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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.


Over the past few years Social Justice Ireland has developed its ability to track the distributive impact of annual Budgets on households across Irish society. Our analysis tracks changes from year to year (pre and post each Budget) and across a number of recent years.  As different policy priorities can be articulated for each Budget, it is useful to bring together the cumulative effect of policy changes on various household types.


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.
 

'Building a New Social Contract – Policy Recommendations’ contains more than eighty specific policy recommendations that would go a considerable direction towards a new social contract to improve the quality of life and wellbeing of everyone and ensure that a no-one is left behind as our economy and society recovers from the impact of Covid-19.


A mature discussion needs to take place about the price of food and who pays for the additional production costs imposed by increased environmental and other conditions.This is an area where there is potential for collaboration between the environmental and agricultural lobby. Recent evidence of this can be found in the mutual opposition to the ratification of the Mercosur trade deal negotiated by the European Commission.


Budget 2021 has left Ireland’s poorest people behind as Government decided not to increase core social welfare rates. Despite allocating more resources than any previous Budget in the history of the State, the distribution of those resources was such that the gap between the poor and the better off will widen in 2021 and inequality will increase. This is a totally unacceptable outcome.

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.


The deprivation figures published by the CSO show that almost 900,000 people still struggle to achieve a basic standard of living. The yearly increase was more than 140,000, and the fact that deprivation is increasing for almost every socio-demographic group is of real concern. 

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.  

One of the objectives of Budget 2021 must be to support demand through Government capital expenditure.  In order to support investment and recovery, it is important that this capital spending is sustainable.  

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