Green Paper launches debate on reform of tax, PRSI systems

A new structure of payment that would replace the existing social welfare and income tax systems is the subject of a just-published…

A new structure of payment that would replace the existing social welfare and income tax systems is the subject of a just-published Government Green Paper.

The release of the discussion document on the "basic income scheme" was announced by the Taoiseach, Mr Ahern, yesterday.

The so-called basic income would be an unconditional amount paid by the Government to each individual in the State, irrespective of personal circumstances. This would be tax free, and all other income, for example from a job, would be taxed. Earlier studies of the concept were undertaken under the aegis of a steering group established under Partnership 2000.

The Green Paper said the proposal studied by the group would involve replacing the existing social welfare and income tax systems with a universal payment to all adults (a lesser amount for children), a flat rate of income tax, and a social solidarity fund to compensate low-income people who would lose from the abolition of social welfare payments.

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This would involve considerable changes to the tax and social welfare systems.

The Taoiseach said: "Publication of this Green Paper honours the commitment to inform and widen future public consideration of the concept by making the result of the steering group's work and analysis on the 'basic income' concept accessible to a wider audience."

The concept of basic income and the question of its application to the State had been the subject of much debate and consideration in recent years, the paper said.

The Government saw the Green Paper as a further contribution to an ongoing debate rather than an end point in itself, it said.

Yesterday, the Conference of Religious in Ireland (CORI) justice commission, which is a social partner, welcomed the paper.

Father Sean Healy of CORI said the old tax system was designed for the 20th century and did a good job - but now something new was needed for the 21st century. He said the basic income amount would be paid to everybody. Everything above that would be taxed. There would be no tax-free allowance and no PRSI.

CORI said the system would be more effective at tackling poverty than the present tax/welfare system and should form part of a comprehensive strategy to eliminate poverty in the years ahead.