asked the Taoiseach the steps, if any, his Department has taken to establish the task force promised under An Action Programme for the Millennium to investigate the introduction of a basic income scheme. [22736/97]
Ceisteanna—Questions. - Basic Income.
In An Action Programme for the Millennium the Government is committed to producing a Green Paper on the issue of basic income within two years. The social partners are also committed in Partnership 2000 to carrying out an independent appraisal of the concept and the full implications of introducing a basic income payment for all citizens, taking into account the work of the ESRI, CORI and the expert group on the integration of tax and social welfare.
In line with these commitments a working group on basic income has been established under the auspices of my Department to examine how the issue should be dealt with. The working group, having reviewed the material available on basic income, has developed terms of reference for a study whose findings will assist the group in progressing its work. The study, to be undertaken by independent consultants, will commence shortly and it is envisaged it will be completed by the autumn.
Fáilte romhat ar ais tar éis na Nollag. The commitment in the programme for Government to examine the concept of a guaranteed basic income is welcome. I stress the urgency of consideration of that matter. How many times has the task force met? Will the report which the Taoiseach said will be published in the autumn deal with the labour force implications as well as the fiscal implications of a basic income, two aspects of the remit of the task force?
The task force has met five times and has held a seminar and a number of open days. The intention is that by the autumn the working group will have evaluated economic and social developments and considered the labour force issues, the displacement factors involved and what should be done regarding the tax and welfare system. It will examine in detail the CORI report which suggested fixed amounts of over £70 for adults and £21 for children. It is not a question of the group evaluating matters from a green field. A considerable amount of assessment has taken place and it will continue from there. An independent evaluation of the impact of such a system needs to be carried out at this stage.
Does the Taoiseach agree the concept of a basic income is diametrically opposed to the tax policy of the Government in that a basic income would involve an increase in the basic rate of tax to fund direct cash payments to the people? Does he agree, therefore, there is a philosophic contradiction in the Government commissioning a report on something which is directly contrary to its declared tax policies?
The Deputy may believe we should not bother examining these matters but we believe there is merit in doing so. We also believe it is worth examining the tax credits issue. We must determine if it is fairer than the present system——
Of course it is.
——and the issues that need to be implemented to make it fairer. There is a lot of merit in examining the question of tax credits and a basic income. Only loose studies have been carried out on those issues and the bodies who carried them out would appreciate if the matter were followed through. The commitments in An Action Programme for the Millennium and Partnership 2000 will be followed through.
Is a particular definition of basic income being put forward for the working group examining the terms of reference? Will a study be carried out on the likely change in attitudes that would result from the introduction of a basic income? We know from experience that once payments are made attitudes to work and income tend to shift. Will such a study be carried out?
Work will be undertaken in two phases. During the first phase the cost and distribution of a basic income will be examined and during the second phase the dynamic effects of such a system from a broad economic and social perspective will be examined. In terms of definition, the working group has been examining CORI's suggestion which has been researched in recent years. The study will assess and explore the short and long-term budgetary implications of introducing a basic income, the taxation provisions necessary to finance it, its effect on labour markets, industrial policy, poverty and economic growth and the gender dimension involved. There will be a broad examination of the issue.
It will take ten years, not two.
I hope not. The study will also take into account the work of the tax credit group.
Will the people carrying out the study have specific regard for the impact of such a system on the free movement of residents and workers within the Single Market of the European Union? Will that element of the study be included in the terms of reference?
I understand it is, but I will make sure that is the case.
Will the Taoiseach agree it is crucial that study will be genuine and not simply an exercise to buy time? Does he accept that the Clark and Healy study and the Nevin study on basic income conclude that if it were introduced the top 30 per cent of earners would lose and the remainder would gain? This would be the direct inverse of the effect of the Government's budget in that under the Fianna Fáil and Progressive Democrats budget the top 30 per cent of income earners gained most while those at the lower end of the income distribution gained least. The adoption of a basic income would involve a complete and welcome reversal of the Fianna Fáil and Progressive Democrats tax policy. Is the Taoiseach saying he can pursue two contradictory tax policies at once?
I would not say that, because I disagree with the Deputy's analysis of the last budget. The tables produced show that people on low incomes will receive increases of up to 11 per cent in some cases when the family income supplement is taken into account, and 5.5 per cent to 7 per cent in many other cases.
They gained less than others.
How much did the Taoiseach gain?
The Deputy's analysis is entirely incorrect. Despite Deputy Bruton not wishing me to carry out this study, I believe it will be useful.
It will require a new Government to implement it.
Only Democratic Left was in favour of it in the last Government.
I agree with Deputy Bruton that the basic income scheme would assist the lower paid and that is in its favour. The perception that it is to be paid for by a hike in income tax is shortsighted and wrong. Will the report include the element of tax reform needed to move the burden of tax from labour to resources, as per the advice of the EU Commission and bodies such as the ESRI, so that the issue is not killed off by those who are against viewing the world of work and the evolving economy in a new way? Will the Taoiseach consider the two phases he spoke of being conducted in parallel so that when the first phase is produced it is not subject to the vitriol of those who would speculate on the second phase, without having the information to which the second phase might give rise? The two phases merit being dealt with in parallel to give as complete a picture as possible of the impact and merits of basic income when the report is published.
I note the Deputy's points. The working group comprises all the social partners and the Departments of Finance, Enterprise, Trade and Employment and Social, Community and Family Affairs. The papers mentioned will be taken into account by the working group — the CORI and ESRI evaluations and the evaluation on tax credits. I am not sure how it will take its work forward but I will raise the Deputy's suggestion. The working group will also take into account the valuable work done over a number of years by the expert group on the integration of tax and social welfare. All of the ingredients enabling a comprehensive examination of this issue are on the table.
Is the Taoiseach aware the study prepared by Fr. Seán Healy and Professor Clark for CORI advocating a basic income concludes that there has to be a tax rate on all income, except the basic income, of between 44 per cent and 50 per cent to pay for it? How does the Taoiseach reconcile that with his tax policy?
We are endeavouring to honour commitments to comprehensively examine issues which the social partners and many organisations believe are worth evaluating to see if a fairer system of tax distribution can be devised without making the tax system more complex and cumbersome to the point where it fails to deliver the distribution targets set out in the document. I have met and discussed the matter with Fr. Healy and his colleagues on a number of occasions over the years and as Leader of the Opposition I also took part in studies with them on the subject.
All those who have looked at this issue, whether it be the ESRI, CORI or the working group on tax and social welfare, are aware there is no easy resolution to major changes in the tax system. When Deputy Bruton as Taoiseach was involved in negotiating Partnership 2000 he gave a commitment that we would examine all of these issues to see what conclusions and policies for implementation could be agreed. That is what I am doing.
I do not agree with the Taoiseach's tax policy.
The Deputy can refuse to accept the decrease in the rates when they are due if he does not agree with them.
The Taoiseach did not answer my question.