Minister Doherty welcomes the positive social impact assessment of Budget 2018


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Friday 2nd February 2018

Minister for Employment Affairs and Social Protection, Regina Doherty T.D., has welcomed the findings of a social impact assessment of the tax and welfare measures in Budget 2018 noting that they reflect the government’s values and aspirations.

The assessment is undertaken using SWITCH, the tax/welfare microsimulation model developed by the Economic and Social Research Institute (ESRI), and is published online today here.

Minister Doherty said “The social impact assessment confirms that Budget 2018 succeeds in its goal for everyone to benefit from the recovery. It shows that the main tax and social welfare budget measures will increase average household incomes by about €11.40 per week in 2018, and it finds a similar progressive pattern to Budget 2017 with bigger gains for those on the lowest incomes.”

Social impact assessment (SIA) is an evidence-based methodology to estimate the likely distributive effects of policy proposals on income and social inequality. The study conducted by the Department of Employment Affairs and Social Protection, based on the SWITCH model, captures the impact of the main tax and welfare policy measures in Budget 2018 on household incomes, family types and poverty.

The 2018 SIA includes the impact of budgetary measures on the increase in the national minimum wage, increased weekly welfare rates for adults and the increased Christmas Bonus paid in December 2017. It also incorporates direct tax items which include a reduction in two of the USC rates by 0.5 percentage points, increases in the standard rate cut-off points for income tax and increases in the Home Carer Tax Credit and the Earned Income Credit.

The assessment found that the average household income will increase by 1.1% (€11.40 per week) as a result of Budget 2018. Lower income groups gain 1.9% from the budget measures, nearly 2.5 times the gain of higher income groups at 0.8%. There were gains in income across all family types, with non-earning households gaining most. Non-earning lone parents, non-earning couples (with and without children) and non-earning singles gain the most at 2.5, 2.8 and 3 per cent respectively. Other family types that experience above average gains include employed lone-parents, single-earner couples with children and retired singles.

The analysis finds that relative income poverty will fall as a result of the Budget, continuing the trend for social transfers to perform strongly in reducing poverty.

Minister Doherty reiterated her comments made on Budget day, stating “This Government believes in helping those who need it most and building a fairer society where we leave nobody behind. The approach of Budget 2018 suggests that the strong performance of social transfers to date in alleviating income poverty is likely to continue. The targeted measures introduced contribute to building a sustainable and resilient economy by rewarding work, protecting the most vulnerable and further improving poverty levels, household incomes and living standards.”

ENDS
Department of Employment Affairs and Social Protection

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Last modified:02/02/2018