Dr. Karina Doorley:

I echo what Dr. McQuinn said. While we would not be saying that raising taxes right now is the right way to go, certainly a date on whether revenue does need to be raised through taxes in the future is a good idea. It is possible that at some point in the medium to long term the State will have to raise extra revenue, either to pay for the extraordinary Exchequer costs incurred during the pandemic or to finance a larger role for the State going forward, which it seems there may be a public and political appetite for at the moment. That is something we are currently looking at and are doing some research on. We are looking at the options for raising revenue. We are looking at everything from direct tax, indirect tax, corporation tax, property tax, congestion charges and so on. The research, which is being done by colleagues of mine at the ESRI, is likely to be out in May. What we will be looking at is what is the likely revenue gain from changing the parameters of each of these types of taxation and, importantly, what are their distributional effects – who are they going to affect, who are the winners and who are the losers from each of these options. That is quite important.

Deputy Boyd Barrett mentioned inequality increasing. We do know that in the absence of the Covid supports last year that income inequality would have increased quite substantially and so would poverty rates. As it is, with the introduction of the PUP and the wage subsidy scheme, disposable income inequality, after tax and transfers, has been quite stable between the pre and post-pandemic period, but the caveat is there that when these supports are withdrawn it is quite possible that income inequality and poverty will increase if there are not enough labour market opportunities for people.

High income inequality is linked to many things we would like to avoid, including lower economic growth, lack of social cohesion, worse population health and well-being and higher poverty. When these supports are withdrawn it will be important to ensure there are adequate labour market opportunities, or adequately targeted supports, to ensure income inequality will not increase.