Oireachtas Joint and Select Committees

Tuesday, 17 November 2015

Committee on Finance, Public Expenditure and Reform: Select Sub-Committee on Finance

Finance Bill 2015: Committee Stage

4:00 pm

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael) | Oireachtas source

The Department of Social Protection, as is usual, conducted a social impact assessment of the welfare and income tax measures in budget 2016, with input from the Department of Finance and the Department of Public Expenditure and Reform. The main findings are that average household incomes will increase by 1.6% or €14 per week as a result of budget 2016; there are higher than average gains for the bottom two quintiles, while the smallest gain is in the top quintile; social welfare measures primarily benefit the bottom two quintiles; child expenditure, though universal, favours lower income households; income tax changes, though spread across all quintiles, are most beneficial to middle and higher-income groups; households with children are the biggest beneficiaries from budget 2016, in particular, working lone parents; households without children gain less than the average, with unemployed single persons showing the smallest increases; there is no significant change in the at-risk-of-poverty rate, as social transfers continue to perform strongly in reducing poverty; the budget provides greater rewards for working, with over 80% of the unemployed being substantially better off in work; the impact of the increase in the national minimum wage is quite significant for the small minority of households affected, with middle-income quintiles gaining the most; and compared to the previous year, budget 2016 delivers considerably bigger gains to the poorest households. The assessment contradicts Deputy Tóibín's argument.

Admittedly, if one picks out only one element of the budget, such as USC, personal tax reductions, it is the nature of tax reductions that the more one earns, the more one gets if tax is reduced. That is obvious. However, we deliberately balanced the gains for those on middle incomes with gains through social welfare and the minimum wage for those on low pay. The assessment is as I have outlined.

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