Significant steps should be taken this year towards addressing inadequate social provision and an unfair tax system, writes Fr Seán Healy.
As the announcement of Budget 2006 approaches, we face major challenges, challenges that flow from success. A dramatic encapsulation of these can be seen in the projected growth in population. The State's population is projected to grow to 4.5 million by 2011 and to 5.5 million by 2030 from its current level of just over 4 million. People have come to this country to take up employment in the past year from more than 120 nations.
This highlights the scale of the challenge facing us in the coming years. In a country whose infrastructure and social provision are well below the EU average, it also highlights the need to take the window of opportunity currently available to address these deficits.
Ireland needs to address its inadequate social provision and infrastructure provision and its unfair tax system. Budget 2006 provides a timely opportunity to take significant steps on these three issues.
The Budget should:
The Irish Exchequer is in a very healthy state. The resources currently available should be used to build a fairer society by eliminating the current infrastructure and social provision deficits.
Sixty per cent of all those at risk of poverty live in households headed by a person who is not in the labour force. These are people who are ill, have a disability, are older or have caring roles. They depend on the social welfare system to provide sufficient income to enable them live life with dignity.
The Government made a commitment in the National Anti-Poverty Strategy to raise the lowest social welfare rates to 30 per cent of gross average industrial earnings by 2007. In monetary terms this would be €187.80 - hardly an extravagant amount. These payments are currently €37 short of that target with two budgets remaining. An increase of €17 a week in Budget 2006 and €20 a week in 2007 would see Government honour its own commitment on this issue.
There are close to 50,000 households on waiting lists for social housing. The National Economic and Social Council in a recent study estimated that the Republic would need an additional 73,000 social housing units by 2012. Sufficient resources should be provided in Budget 2006 to make a substantial start on meeting this target.
Two issues regarding children have received a lot of attention in the run-up to the Budget. These issues are childcare and child poverty. Cori Justice Commission believes that the child must be at the centre of any policies adopted to address these issues.
Our proposal is that Government should introduce a refundable tax credit payable for every child in the country. This would enable both issues to be addressed in an integrated, efficient and effective manner. The credit would be available for all children, irrespective of whether or not their parents have a taxable income. For those with a taxable income the credit would be added to their existing tax credits (or could be paid directly to the parents if they so wished); for those who have no taxable income the credit would be refundable and available upon request. Parents would be free to decide how to use this payment. It could be used to assist in paying for childcare or to assist a parent who chooses to remain the full-time carer of the child.
Ireland needs a fairer tax system. There is something profoundly unfair about a situation where some millionaires pay no tax while those on low incomes must pay tax. Some of the changes introduced in recent years have moved in the right direction. The introduction of tax credits is an example of such a positive change.
Now Government has the opportunity and the resources to make the tax system much fairer. The most important step is to address the skewed nature of some parts of the tax system.
Tax reliefs, for example, cost the Exchequer an estimated €8.4 billion a year but are skewed dramatically to benefit the better-off. Tax reliefs on employee's occupational pensions, for example, are such that the bottom 20 per cent of households gain zero per cent of the relief while the top 40 per cent of households gain 89 per cent of the value of this scheme.
Cori Justice Commission estimates that at least €2 billion would be available to the Exchequer if all tax reliefs were standard rated (made available at 20 per cent rather than at 42 per cent which is the case for many at present). While this would be only one step in the right direction it would produce a much fairer tax system while also making substantial resources available.
Ireland has a window of opportunity if it is to address the major challenges posed by economic success. Budget 2006 provides an obvious moment to take the necessary steps to build a society characterised by fairness and wellbeing.
Seán Healy SMA is director of the Cori (Conference of Religious in Ireland) Justice Commission