Tax and Benefit Changes, 2020-2022

Social Justice Ireland’s income model tracks the distributive impact of annual budgets on households across Irish society. On this page we consider the cumulative impact of changes to taxation and welfare over the two Budgets delivered by the current Government (Budgets 2021 and 2022). 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 households we examine are spread across all areas of society and capture those with a job, families with children, those unemployed and pensioner households. 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 earners with incomes ranging from €30,000 to €200,000.

In the case of working households, the analysis is focused on PAYE earners only and therefore does not capture the Budget 2021 measures targeted at the self-employed. The analysis is focused on changes to income taxation and non-Covid-19 related welfare measures and does not take account of other budgetary changes in taxation and service provision.

Among households with jobs (see Chart 1), the gains experienced range from a mere 39 cent per week (for low income couples on €30,000) to €16.11 per week for couples with incomes over €80,000. Earners on the living wage gain more on account of the increase in the level of that payment. The analysis highlights how low income families, those with incomes below the standard rate income tax threshold gained least from the budget measures over the past two years.

Chart 1: Overall Impact 2020-2022 on Households with Jobs

Note: Increases to the Living Wage are included but are not direct policy decisions of Government.

Source: Social Justice Ireland 2022, Social Justice Matters: a 2022 guide to a fairer Irish society, p57-59

Among households dependent on welfare (see Chart 2), the gains have ranged from €5 per week for single unemployed individuals to €24.65 per week for unemployed couples with 2 children over 12 years of age.

The gains experienced by welfare dependent households over recent years explain much of the reason why the levels of income inequality and poverty have fallen in recent years. Social Justice Ireland has consistently argued for the prioritisation of low income welfare dependent families in Budgetary policy and welcome these outcomes. However, we are concerned that recent Budgets have shifted away from this approach.

Chart 2: Overall Impact 2020-2022 on Welfare Dependent Households

Note: Increases to the Living Wage are included but are not direct policy decisions of Government.

Source: Social Justice Ireland 2022, Social Justice Matters: a 2022 guide to a fairer Irish society, p57-59

Budget Choices 2023 is available to download now.