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Income Distribution

17th of October is the International Day for the Eradication of Poverty.  In this era of increasing global wealth and economic growth it is important to highlight the large numbers of people living in poverty both here in Ireland and globally.  It is also a day to point to the policy options available that can improve the living conditions for all.  We can and should implement these policies without delay.

With 800,000 people in poverty, record numbers on healthcare waiting lists and more than 3,800 children homeless, Ireland is a profoundly unequal place. Inequality hurts the economy, leading to unstable economic growth and employment, higher debt, housing bubbles and increased homelessness. Substantial evidence has emerged in recent years to support the view that economies and societies perform better across a number of different metrics, from better health to lower crime rates, where there is less inequality.

Just two of the income taxation proposals currently under consideration for Budget 2019 would produce fair outcomes: an increase in the personal tax credit for everyone or a reduction in the 0.5% and 2% USC rates. The impact of most income tax proposals currently being considered by government would give far greater benefit to people earning higher incomes than to lower income employees.

Social Justice Ireland published Fairness and Changing Income Taxes: September 2018 on 18th September. The study assesses the fairness of seven possible income taxation options, each with a full-year cost of between €254m to €348m; equivalent to between 1.2% and 1.6% of the annual income taxation yield.

In this section of our National Social Monitor Autumn 2018 we look at income distribution patterns, the widening gap of income migration and poverty and propose a number of policy priorities to tackle the causes of these issues.

The Government has failed to respond adequately to our nation’s housing crisis. There are almost 87,000 households on social housing waiting lists - over half of whom are families - and 10,000 homeless, of whom 3,600 are children. This is a national emergency. The impact of homelessness and precarious housing on our nation’s children will be felt for generations to come.

With 10,000 people - including 3,600 children - homeless, 72,000 mortgages in arrears, and 87,000 households on social housing waiting lists, it can hardly be denied that Government policy is a dramatic failure.

Government should stop subsidising the Accommodation and Food Services sector and instead should incentivise the kind of jobs that allow workers to achieve a decent standard of living.

Last week (12th April 2018), the Department of Housing, Planning and Local Government released its Review of Delivery Costs and Viability for Affordable Residential Developments, which enumerated the many reasons why providing affordable homes was difficult.  There are many issues with this report, primarily with the lack of urgency in the Government’s response to this national emergency, however one glaring problem is its viability and affordability model.  It is neither viable nor affordable.

Current welfare systems were not designed to adapt to the challenges presented by automation and globalisation and are not fit for purpose. That's the view of a new paper from the Adam Smith Institute in the UK published to coincide with the World Economic Forum meeting in Davos this week. The institute argues that governments should look to Universal Basic Income (UBI) experiments around the world as they seek to address the risks posed by large-scale changes to the labour market while retaining the benefits of trade and technological progress.

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