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Lower income households hit hardest by Budget 2019

A new report is warning that the public will be worse off as a result of Budget 2019 – with...
Newstalk
Newstalk

10.30 11 Dec 2018


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Lower income households hit ha...

Lower income households hit hardest by Budget 2019

Newstalk
Newstalk

10.30 11 Dec 2018


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A new report is warning that the public will be worse off as a result of Budget 2019 – with lower income households hit hardest.

The ESRI report says Irish households are set to see a 0.7% reduction in income as a result the budget.

It said lower income households will face a 0.8% reduction while higher income households will see a 0.8% reduction.

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ESRI research officer Barra Roantree said there are a number of reasons for the difference.

“Lower income households received a slightly larger proportion of losses - that’s 0.8% rather than 0.7% - and that is because of the decision to freeze personal employee tax credits in cash terms and increase benefit payments by less than wage growth,” he said.

“Higher income households will see slightly smaller proportional losses - about 0.5% - and that is because they benefit from cuts to the Universal Social Charge and also an increase to the point at which you start to pay the higher rate of income tax.”

Corporation tax

The report also highlights a number of risks to the Exchequer coming down the tracks.

Chief among these is the Government’s over-reliance on corporation tax – 40% of which is currently paid by just 10 companies.

“We have warned that the Government faces a number of risks to the public finances in the future including the overreliance on what are relatively volatile corporation tax receipts,” he said.

“Almost 40% of those receipts are paid by just ten companies.

“Given these are highly volatile and concentrated among such a small number of firms we have suggested that the Government may need to look for more stable sources of revenue if it is thinking about future spending increases.”


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