Poverty: The greatest gains of Budget 2005 will go towards the poorest section of the population, according to research conducted by the ESRI.
Tax and welfare benefits will see the income of the poorest 20 per cent of the population rise by between 2 and 4 per cent.
In contrast, high income groups will see little change in their average incomes as a result of the Budget. The top 40 per cent of families will see their income boosted by no more than 1 per cent.
It is expected that the Government's spending plans for next year will also lead to a small reduction in relative income poverty.
Researchers expect it will lead to a fall of around half a percentage point in the proportion of people with incomes less than half the average wage. Relative income poverty measures the number of households below a proportion of the average income, in this case 60 per cent.
Consistent poverty, however, measures the proportion of experiencing income poverty who are also experiencing deprivation.
The ESRI research says the 2005 Budget is in sharp contrast to those of the 1990s, where the greatest gains went to people with the highest incomes.
The last Budget in which gains were strongly tilted towards people on the highest incomes was in 2000.
The 2001 and 2003 Budgets involved a more even distribution, while the 2002 and 2004 Budgets involved substantial gains for those in the bottom half of income distribution.
"Against this background, Budget 2005 can be seen as similar to those in 2002 and 2004.
The major contrast is not between Budget 2005 and recent budgets, but between the Budgets of 2001 to 2005 and those of the 1990s," the researchers said.
The research was conducted by Mr Tim Callan, Mr John Walsh and Mr Kieran Coleman for the ESRI's Quarterly Economic Commentary, Winter 2004. The figures were calculated using the ESRI tax-benefit model, which simulates the social welfare entitlements and direct tax liabilities of a nationally representative sample of households.
The estimates are based on the assumption that there is no change in labour market behaviour in response to the tax and welfare policy changes.
