Temporary Measures Hide Regressive Shift

Posted on Monday, 10 October 2022
Persistent Poverty

Budget 2023 includes a range of measures to address the cost of living and energy crises. Collectively they represent one of the largest and most complex budget packages in many years. Some of the announced measures arise during the remainder of 2022 and others during 2023. Given the challenges that so many households face in making ends meet, particularly those on the lowest incomes, much of that assistance is welcome and badly needed.

 

However, there is a marked difference in the way that the Budget measures are being delivered to households. The Budget includes temporary measures, such as electricity credits and one-off additional welfare and fuel allowance payments, alongside permanent measures such as changes to the value of core welfare payments and changes to tax credits and bands. In time, the temporary measures will disappear but the permanent changes will remain.

Although all help to low income households is welcome at this time, it is of significant concern that the Budget has skewed its resources in this way. When you remove the effect of the various temporary measures planned for 2023, Budget 2023 represents a regressive shift with more resources going to those on higher incomes.

For example among single people in 2023 the Budget’s permanent changes to taxes and welfare deliver the following average weekly gains:

  • An unemployed person: + €12.10
  • An earner on €30,000: + €3.65
  • An earner on €80,000: + €15.92
  • An earner on €100,000: + €15.92

Among couples in 2023 the Budget’s permanent changes to taxes and welfare deliver the following average weekly gains:

  • A pensioner couple: + €22.98
  • An unemployed couple: + €20.08
  • With 1 earner on €30,000: + €0.78
  • With 1 earner on €60,000: + €19.27
  • With 2 earners on  €100,000: + €31.84.

Budget 2023’s legacy will be to widen further the gap between the better off and those on the lowest welfare and work incomes; outcomes we examine further throughout this document. In particular, the Budget has provided least for the large cohort of workers earning around €15 to €20 per hour.