Terence Flanagan (Dublin North East, Independent)
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73. To ask the Minister for Finance his views on income inequality as outlined recently by the Think-tank on Action for Social Change; and if he will make a statement on the matter. [7631/15]

Michael Noonan (Limerick City, Fine Gael)
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I note the report by the Think-Tank for Social Change (TASC) which outlines their views on inequality in Ireland. 

While inequality is an important issue, not just for Ireland but globally, the Deputy should be aware that the TASC report identifies high levels of inequality in respect of market incomes. When inequality in Ireland is looked at in terms of disposable income, in other words what people have in their pockets, Ireland is in very much line with the OECD average. This reflects, inter alia, the effectiveness of  the Irish tax and social welfare system in reducing inequality of market incomes. This is evidenced by the fact that the tax and social welfare system in Ireland reduces the Gini-coefficient (which is a measure of income inequality) by more than any other country in the OECD.

The tax and social welfare is also highly effective at reducing poverty in Ireland. CSO data show that social transfers (excluding pensions) reduced the at-risk-of-poverty rate from 49.8 per cent to 15.2 per cent in 2013. This was one of the highest reductions across the EU Member States in that year. 

These outcomes reflect the highly progressive nature of the Irish tax and social welfare system. For example, the ratio of the tax wedge for an individual at 167% of the average wage compared with an individual at 67% of the average wage, a standard measure of the progressiveness of an income tax system, is the second highest in the OECD. 

While the tax and welfare system plays an important role in achieving a relatively equal distribution of disposable income, this Government believes that the best way to combat inequality is to encourage job creation and to deliver employment opportunities for those at the bottom of the income distribution. This in turn will help to reduce the level of market income inequality identified in the TASC report.