Wednesday, 5 December 2012

TASC's initial response to Budget 2013

Nat O'Connor: TASC's initial response to Budget 2013 is as follows. (PDF available here).

Lost opportunity to provide a pathway to an equitable economic recovery
Continued pensions inequality and cuts to investment underline the need for a process of equality proofing and economic impact assessment to improve Budget process

In an initial analysis of the measures introduced in Budget 2013, TASC Director Nat O’Connor welcomed the introduction of the local property tax, but expressed concern at the likely damaging effect of others measures on economic equality and on job growth.
“As TASC highlights in its own pre-budget analysis, property tax is shown by international evidence to be the least damaging form of tax on jobs and growth.” Dr O’Connor noted. “Likewise, the introduction of deferred payment options makes sense from an equity perspective, whereas a bad precedent was set by the waivers given to those who can afford to buy an empty house in the next three years, as that waiver will be paid for by many people who cannot afford to buy.”

“It is surprising and disappointing that, despite a range of announcements in Minister Noonan’s speech, the Government has not in fact made any real change to Ireland’s pension tax breaks for 2013. All that has been substantively announced is that the Government will consider changes in future years. Pension tax reliefs favour better off sections of society and those subsidies are paid for by other taxpayers who will never enjoy those benefits. The ESRI has shown the 80 per cent of the benefit of pension tax reliefs goes to the top 20 per cent of earners. It is a missed opportunity that TASC’s proposal of reducing relief to the standard rate was not adopted, as this would have raised €500 million that will instead be found through less progressive tax measures and cuts to public services that people on lower incomes rely on more heavily.” Dr O’Connor concluded.

Commenting on the overall Budget package, TASC economist Tom McDonnell expressed serious concern at the cuts to capital expenditure. “The disproportionate cuts to capital expenditure are a false economy and represent a failure of economic policy, which will undermine our medium-term growth potential. All the international evidence shows that an economy’s capacity to grow depends on productive investment. Yet Ireland is projected to have by far the lowest level of investment (gross fixed capital formation) of any country in the EU for the coming years, which is highly likely to mean a weaker growth going forward.”

“The PRSI changes made in the budget represent a highly regressive form of tax increase on earned income that will almost certainly worsen economic inequality in Ireland. TASC has repeatedly emphasised the need for equality proofing of budget measures in advance, in order to ensure that Ireland’s budgets reduce rather than increase inequality.” Mr McDonnell concluded.


Anonymous said...

It beggars belief that the disgraceful cut in the Jobseekers Benefit eligibility from 12 to 9 months didn't even figure in your initial response.

Only in Ireland would you find an insider caste of so-called "socialists" who care not a wit for actual workers.

Doubly ironic that this attack on workers came from a so-called socialist Minister.

Nat O`Connor said...

@ Anonymous

We couldn't cover everything in the initial response, but I agree that the cutting of eligibility is disgraceful and is undermining the whole social insurance system.

We focused on eligibility changes in more detail in our pre-budget proposals, pages 43-44.

Given the large number of people unemployed for every jobs vacancy in the year, the whole policy of squeezing people off of social protection payments is simply wrong, feeds emigration and damages rather than rebuilds our economy.