Dáil Éireann Debate, Tuesday - 13 July 2021
266. Deputy Holly Cairns asked the Minister for Finance the details of the social impact assessments carried out by his Department and public bodies and agencies under his remit since 1 January 2016; and if he will make a statement on the matter. [37293/21]
Amharc ar fhreagraWhile formal Social Impact Assessments as set out by the Department of Public Expenditure and Reform are mainly carried out in relation to expenditure matters, my Department has placed an increased focus upon such analysis of budgetary policy in recent years.
Most recently, in Budget 2020 and Budget 2021, my Department published a distributional analysis of the taxation and welfare measures introduced in each Budget carried out using the ESRI’s micro-simulation model ‘SWITCH’. This analysis is available on budget.gov.ie and shows that each of those Budget packages were broadly progressive. In relation to Budget 2021, this analysis concluded that the lowest four income deciles benefitted the most as a proportion of disposable income, a finding which was supported by the ESRI’s own analysis of the budgetary package.
Over Budgets 2017-2021 my Department also published an analysis of the progressivity of the income tax and welfare system. This is a cross country comparison of the degree to which our tax and welfare systems reduce income inequality, as measured by the Gini coefficient. The latest analysis showed that Ireland recorded the second highest reduction in income inequality in the OECD between market incomes, i.e. before tax and welfare measures, and disposable incomes, after tax and welfare measures.
Outside of the budgetary process, as part of the review of the Local Property Tax in 2019, the distributional impact which a number of illustrative scenarios could be expected to have on levels of disposable household income was modelled across varying income deciles, and results shown relative to a no policy change baseline using the ESRI’s SWITCH model. This distributional impact assessment was undertaken in order to assess the relative progressivity of each scenario.
In addition, for a number of years, the annual Tax Strategy Group (TSG) paper on income tax has provided an overview of the distribution and burden of income tax and USC across income earners. Depending on the particular issue(s) under consideration by the TSG in any given year, further social impact assessments may be included in the TSG paper. For example, the recent income tax TSG papers included analysis in respect of equality proofing and gender proofing of certain aspects of the income tax system. In addition, the Department of Finance regularly carries out reviews of tax expenditures. By way of example, the Home Carers Tax Credit was reviewed in 2019 and included an assessment of the credit in terms of its impact on gender and household income coverage.
Finally, in recent years, there has been increasing moves internationally to broaden attempts to estimate the living standards of the population beyond traditional aggregate economic statistics such as GDP. In recognition of this, my Department published a paper on Well-being and the Measurement of Broader Living Standards in Ireland with Budget 2021. The Programme for Government also committed to developing new measures of well-being in order to create a broader context for policy-making. An expert group to guide the development of a national well-being framework has now been convened through the Department of the Taoiseach, with the Department of Finance a member and a joint sponsor of the work. It is anticipated that the new well-being measures can serve, over time, as a useful reference for a range of policy and budgetary reform initiatives which are currently underway, including: performance budgeting, equality budgeting, spending reviews and proofing of policy proposals against environmental and other goals.
As the development of budgetary policy is not within their remit, the bodies under the aegis of my Department do not undertake social impact assessments.
