Oireachtas Joint and Select Committees

Wednesday, 26 January 2022

Committee on Budgetary Oversight

Indexation of Taxation and Social Protection System: Discussion

Ms Michelle Murphy:

I will give an initial response. We have outlined this in our submission as well. We did some initial figures on this, based on the 2016 census and looking at indexation to the 27.5% of average earnings. We estimate that about 12,000 working-age adults would have been lifted above the poverty line, using the 2016 numbers. If that had been increased by one percentage point to 28.5%, we would be looking at an increase of 28,000 working-age adults. Then one has to take on board the knock-on impact on the households in which those people are living and what the increased income means to those households. One would expect to see a substantial reduction in the poverty risk. Our analysis, looking at budgets from 2017 to 2022, has shown that in those budgets in which core social welfare payments were increased, it had an impact in the form of a reduction in the risk-of-poverty rate. The correlation in that regard can be seen when one increases the incomes of those who are on the lowest incomes and those on core social welfare rates. There is a correlation in respect of the reduction of poverty risk.

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