Figures to be published today by Tánaiste Joan Burton show that Budget 2016 will deliver “considerably bigger gains” for the poorest households than measures announced in the previous budget and introduced this year.
Amid claims that the package was unfair to those on lower incomes, an analysis of the 2016 plan for the Department of Social Protection will show the “redistributive impact” of Budget 2016 has double the impact of the 2015 package.
The assessments shows the gains realised by the two lowest income groups will be up to six times greater than in 2015, rising from 0.3-0.4 per cent of income in 2015 to 1.8-2 per cent in 2016.
The gains in the middle and fourth income groups also increased, by a smaller multiple of between two and three times. The department’s social impact assessment of the budget shows that the “smallest” benefit will be realised in the highest of the five income groups, with gains increasing from 1 per cent in 2015 to 1.4 per cent in 2016.
The figures, seen by The Irish Times, follow modelling based on the the “Switch” tax and welfare microsimulation mode, which was developed by the Economic & Social Research Institute.
The assessment examining the impact on household income is measured by income quintile – five equally sized groups ranked by income – and by family types. The examination of family types takes account of 14 categories differentiated by composition and employment status.
Average household
According to the study, the gain in average household income is 1.6 per cent, the equivalent of €14.30 per week.
“This continues the pattern from 2015 of an increase in household incomes. In all, 98 per cent of households benefit from the budget, though the percentage is slightly lower in the bottom quintile (92 per cent),” the department will say.
The assessment finds that social welfare measures primarily benefit the bottom two income quintiles and child expenditure, though universal, favours lower income households. Although the income tax reductions in the Budget are spread across all income quintiles, they are “most beneficial” to middle and higher income groups.
“The impact of the increase in the national minimum wage is quite significant for the small minority of households affected, with middle income quintiles gaining the most.”
The assessment finds households with children are the biggest beneficiaries: “The biggest beneficiaries are earning lone parents, and dual and non-earning couples with children, with average gains of 2 per cent.”
Smallest gains
Households without children gain less than the average, with unemployed single people showing the smallest gains.
“Non-earning lone parents and single earning couples with children fare above average, gaining around 1.8 per cent,” the assessment finds. “Retired households and households without children record increases of over 1.2 to 1.5 per cent.
“Unemployed singles and couples do least well, with average gain of under 1 per cent.”
The assessment finds no significant change in the at-risk -of-poverty rate as social transfers “continue to perform strongly” in reducing poverty. The impact on at-risk-of-poverty is based on the 60 per cent median income threshold, disaggregated by social group.
“The budget provides greater rewards for working, with over 80 per cent of the unemployed being substantially better off in work,” the assessment will say.
