The Sunday Business Post Red C Poll found that:

• More than three quarters (76%) of respondents would probably implement tax increases if they were formulating the budget compared to 5% who would avoid such increases.
• 48% would avoid cuts in child benefits and pensions compared to 17% who would make cuts in these payments.
• 44% would avoid cuts in spending on health and education compared to 20% who would make such cuts.

Social Justice Ireland has published a detailed outline of the adjustments Government should make in Budget 2010 to achieve its target of stabilising exchequer borrowing as a percentage of GDP.

Total tax-take needs to change - article in Irish Examiner by Director of Social Justice Ireland

 The Government can meet its budget expenditure cuts without reducing social welfare payments or the minimum wage.

This article by Seán Healy, Director, Social Justice Ireland, was published in the Irish Examiner on October 7th, 2009

The cuts sought by Government in current expenditure in Budget 2010 can be delivered without reducing social welfare or the minimum wage. The Government’s own documentation states that cuts of €1,500m will be required in current expenditure. This requirement has been constantly misrepresented in public commentary in recent weeks when media reports and commentators have stated that cuts of €4,000m are required.

This misrepresentation has been exacerbated by the statement from the Central Bank yesterday (October 6, 2009) arguing that welfare had risen so much in the past decade it should be reduced. This statement failed to acknowledge that a decade ago welfare payments were extremely low and poverty rates were far above the average-EU level. The welcome increases in recent years have led directly to a reduction of the poverty level in Ireland to the EU-average.

16% of Ireland’s population lives in poverty. This means they live with incomes less than €12,000 for a single person or less than €28,000 for a household of four. It ill-behoves officials in the Central Bank or any other institution who receive many multiples of this level of income that they argue for cuts in the paltry income of Ireland’s most vulnerable people. Such cuts are unnecessary as the Budget parameters set out by Government can be met by other means.

The scale and composition of the decisions Government are to make in Budget 2010 are clear - indeed they are clearer than has been the case for any Budget over the last two decades.

In the 2009 supplementary Budget the Minister for Finance published a detailed set of Budgetary parameters to which he committed to adhere over the course of the next few years.

These commitments were made to convince the public, investors, international lenders, the European Commission and the European Central Bank of Ireland’s commitment to address over five years its fiscal problems and return the exchequer to within the rules of the EU Stability and Growth Pact. Recent public discourse has ignored these parameters and focused almost exclusively on cutting public services.

As regards Budget 2010, the Government committed to collect an extra €1.75billion in taxation revenue, cut current expenditure by €1.5b and reduce capital spending by €750m - a total of €4billion of adjustments in the first year and €4.75bn in a full year (once all the taxation changes have taken effect). Table 1 reproduces the table which outlined these commitments in the April 2009 Budgetary documentation.

While there are very difficult decisions to be taken in achieving each of these figures, the focus of debate and discussion on the budgetary process should be on these targets.

Tax take plummets towards record low: Reform Required

Despite significant increases in the tax-take from the PAYE sector in the last two Budgets, the scale of collapse in Ireland’s tax revenues has been dramatic. National taxes (those announced in the Budget and collected centrally) have fallen by over €13bn since 2007 with the largest fall in areas such as capital gains taxes, stamp duties, corporation taxes and VAT. Despite the new income levies, the total income tax take has fallen from €13.6b to €12.4b. Overall, Ireland’s tax take as a percentage of national income will decline from 31.41% of national income in 2007 to 27.41% of GDP in 2009. These figures represent the lowest tax take for Ireland since Eurostat commenced compiling this data. Ireland’s total tax-take as a percentage of national income is now one of the lowest in the developed world.

While a proportion of the tax decline is related to the recession, a large part is structural and requires attention. Budget 2010 should start that process. Over the next few years policy should focus on increasing Ireland’s total tax take to 34.9% of GDP, a figure defined by Eurostat as ‘low-tax’ but a level sufficient to ensure that Ireland delivers appropriate public services.

While Ireland should remain a low-tax economy, Irish society cannot expect to have efficient European style public services unless we collect sufficient taxation. Ireland’s total tax-take is now ranked beside Romania, Lithuania, Slovakia, Latvia and Estonia. If Ireland decides to set its total tax-take at the level of these countries then it must also set its services and pay rates at the same level as these countries. The alternative is to raise Ireland’s total tax-take to a level that maintains our status as a low-tax country but does this in a fair and equitable manner without raising income tax rates.