Assessing the Fairness of Recent Budgets

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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.

Here, we assess the cumulative impact of changes to income taxation and welfare over the three Budgets of the current Government (Budget 2017, 2018 and 2019). As different policy priorities can be articulated for each Budget, it is useful to bring together their cumulative effect. The households we examine are spread across all areas of society and capture those with a job, families with children, those unemployed and pensioner households (see charts below). Within those households that have income from a job, we include workers on the minimum wage, on the living wage, workers on average earnings and multiples of this benchmark, and families with incomes ranging from €25,000 to €200,000.

At the outset it is important to stress that our analysis does not take account of other budgetary changes, most particularly to indirect taxes (VAT and excises), other charges (such as prescription charges) and property taxes. Similarly, it does not capture the impact of changes to the provision of public services. As the impact of these measures differs between households it is impossible to quantify precise household impacts and include them.

Among households with jobs (see Chart 2), the net income gains experienced range from €4.22 per week (for a single worker on €25,000) to almost nine times as much, €37.19 per week, for a couple with 2 earners and an income of €200,000. Overall, across these households the main gains have flowed to those earning the highest incomes.

Among households dependent on welfare, the gains have ranged from €15.04 per week (to single unemployed) to €32.52 per week to unemployed couples with 2 children - see Chart 1. Over these three Budgets all household types recorded increases in their disposable income. However, it is single unemployed people and those on the lowest earnings who have gained least.