Well Ronan, yes there is scope in a wide area of the social welfare budget for savings, but instead of picking on the most vulnerable our society. Why not first tackle the honey pots of the X politicians and top civil servants who have after all escaped with their lofty pensions having destroyed the country. Transparency, Simplicity and Fairness is not achieved by stamping on most vulnerable.
The best way to tackle the shortfall in government coffers is to invest in the Unemployed to get them back to work. Investing in re-education of this resource makes a lot of sense! Precisely assessing the needs of industry and amending the training schemes to suite this need. Taking the meager handout the unemployed get is only going to depress the economy still further. The various sections of society that are highlighted are also consumers and they spend their money.
Graham
,
Child benefit is a taxeable earning at the higher rate. For the first child in a single income family, this tax can be offset as the stay at home parent is considered a carer in the home to a dependant. The fact that most PAYE workers don’t declare it is due in my opinion to the unclear, disjointed and confusing way it is explained on Revenue’s website.
As for joining and cross-referencing Revenue and Welfare information – I can’t believe this is not already in place.
Unemployed Person
,
Why not just shoot the old, the unemployed, the infirm, the one parent families and all those other wastes of space that are clearly too costly for the State? A bullet only costs about 80c. Spare the employed middle classes though as they need to be milked for their earning.
Hopefully that will mean more money available to put into banks, huge salaries for the Irish elite, quangos, tax breaks, etc. A just and fair society – as long as you are one of the people who run it.
MichaelG
,
“The 2011 Revised Estimates for Public Services break down that €53bn in current spending. Three quarters of the total, €39bn, goes directly as someone else’s income, either in the form of public sector pay (€15.8bn), public sector pensions (€3.2bn)….”
The nature of the public sector Pay As You Go scheme means that most of the public sector pension payout is paid in by public servants as a deduction of Pension contributions and Pension Levy from their pay of €15.8bn. Net Government pensions contribution this year is in the region of €600-800m.
…The detail is available on the Comptroller General’s website; don’t have time to dig it out now…
Laura
,
Ronan – cash payments from welfare are already taxable. Its only childrens allowance and supplementary payments (i.e. rent allowance) that are not.
Medical card is more difficult, the value of the card itself is complicated by its access gateway to many other welfare forms (such as free exam fees).
Johnf
,
Ronan
This proposal would bring social welfare spending in Ireland in line with Scandinavia where it is seen as social income and treated like any other income.
Rent allowance is the main distortion in the system and can easily make employment unattractive to anyone with a family. Indeed an an analysis of income versus total social welfare by the OECD in 2009 shows Irish social welfare payments for an average family (2+2)to be 90% of average nett industrial wage the most generous in the OECD. To get out of this mess welfare will have to be taxed(reduced)as will Public pay and income tax will have to rise. I regret to say this as a public servant who was on welfare but any logical analysis will show there is no other way.
Of course public pay and welfare is being reduced by 2-3% P.A by being frozen until 2015 if not longer.
WishfulThinking
,
Thank you Ronan for taking the time to put this valuable article together.
Firstly, as a lone parent (through no fault of the taxpayer) I am grateful for the state financial assistance available to support myself and my 12yr old son.
However he is now at an age that is allowing me to begin gaining financial independence from the state by returning to third level education. I am now in 2yr but my maintenance grant has been slashed by 60% compared to last year given that I am no longer entitled to the non adjacent rate.
This leaves me in an incredibly difficult financial situation at a time when I need to be able to focus on my studies. Education is the only long term solution that will enable me to contribute to back to the exchequer.
On the other hand, there are a number of continuous long term welfare claimants in my local rural village throughout the Celtic Tiger, apparently unquestioned by the state. They are mostly unattached, able-bodied men under 35yrs of age that could easily have relocated for work but choose to rely on social welfare with the odd cash-in-hand job to top up their daily drinking fund (1). This amazed me since I have to justify my circumstances to state bodies bi-anually. I also believe it to be a pitiful waste of human resources that should be challenged regularly and addressed with community service while receiving welfare; volunteering has had enormous benefits for me while in receipt welfare enhancing my sense of pride, wellbeing and productiveness to cope with the undignity of welfare dependancy. However, my attitude to welfare support does not appear to be widely replicated ie: a lone mother of 3 children; state dependant for last 11yrs, is now expecting twins with her new ‘unemployed’ partner (ref:1). Another 2 state dependant children to add the exchequer bill. One of many similar realities I personally know of.
I view such frivilous child bearing on par with politians abuse of expenses funds.
Both of which need to be addressed urgently.
James
,
Great article Ronan. I think its shambolic that we spend nearly as much money encouraging people to raise kids by themselves than we do on the entire 3rd level budget. We’re encouraging young women to make single parenting their career choice, encouraging the birth of more children who are far more likely to grow up in poverty. That may sound harsh but its reality, its an issue and it needs to be addressed. Education is the key to ending inequality, if social welfare is the highest portion of expenditure then it must be reformed, especially in the current climate. One great way to start is just as you expressed: treat all SW income as personal income and tax it. There should be no un-means tested benefits such as child benefit for the rich, and free medical cards for rich pensioners. After that we have to address the negative incentives some of the payments make, an example being the limitless period of unemployment benefit, discouraging people not to get back to work as soon as they can.
[…] of the ten income deciles. It takes into account earned income and transfers/benefits – which as I’ve stated before I believe should be treated as any other income source, to level the playing field between work and […]
“make all income from the State taxable” | Machholz's Blog ,
[…] By Ronan lyons […]
Thomas ,
Well Ronan, yes there is scope in a wide area of the social welfare budget for savings, but instead of picking on the most vulnerable our society. Why not first tackle the honey pots of the X politicians and top civil servants who have after all escaped with their lofty pensions having destroyed the country. Transparency, Simplicity and Fairness is not achieved by stamping on most vulnerable.
The best way to tackle the shortfall in government coffers is to invest in the Unemployed to get them back to work. Investing in re-education of this resource makes a lot of sense! Precisely assessing the needs of industry and amending the training schemes to suite this need. Taking the meager handout the unemployed get is only going to depress the economy still further. The various sections of society that are highlighted are also consumers and they spend their money.
Graham ,
Child benefit is a taxeable earning at the higher rate. For the first child in a single income family, this tax can be offset as the stay at home parent is considered a carer in the home to a dependant. The fact that most PAYE workers don’t declare it is due in my opinion to the unclear, disjointed and confusing way it is explained on Revenue’s website.
As for joining and cross-referencing Revenue and Welfare information – I can’t believe this is not already in place.
Unemployed Person ,
Why not just shoot the old, the unemployed, the infirm, the one parent families and all those other wastes of space that are clearly too costly for the State? A bullet only costs about 80c. Spare the employed middle classes though as they need to be milked for their earning.
Hopefully that will mean more money available to put into banks, huge salaries for the Irish elite, quangos, tax breaks, etc. A just and fair society – as long as you are one of the people who run it.
MichaelG ,
“The 2011 Revised Estimates for Public Services break down that €53bn in current spending. Three quarters of the total, €39bn, goes directly as someone else’s income, either in the form of public sector pay (€15.8bn), public sector pensions (€3.2bn)….”
The nature of the public sector Pay As You Go scheme means that most of the public sector pension payout is paid in by public servants as a deduction of Pension contributions and Pension Levy from their pay of €15.8bn. Net Government pensions contribution this year is in the region of €600-800m.
…The detail is available on the Comptroller General’s website; don’t have time to dig it out now…
Laura ,
Ronan – cash payments from welfare are already taxable. Its only childrens allowance and supplementary payments (i.e. rent allowance) that are not.
Medical card is more difficult, the value of the card itself is complicated by its access gateway to many other welfare forms (such as free exam fees).
Johnf ,
Ronan
This proposal would bring social welfare spending in Ireland in line with Scandinavia where it is seen as social income and treated like any other income.
Rent allowance is the main distortion in the system and can easily make employment unattractive to anyone with a family. Indeed an an analysis of income versus total social welfare by the OECD in 2009 shows Irish social welfare payments for an average family (2+2)to be 90% of average nett industrial wage the most generous in the OECD. To get out of this mess welfare will have to be taxed(reduced)as will Public pay and income tax will have to rise. I regret to say this as a public servant who was on welfare but any logical analysis will show there is no other way.
Of course public pay and welfare is being reduced by 2-3% P.A by being frozen until 2015 if not longer.
WishfulThinking ,
Thank you Ronan for taking the time to put this valuable article together.
Firstly, as a lone parent (through no fault of the taxpayer) I am grateful for the state financial assistance available to support myself and my 12yr old son.
However he is now at an age that is allowing me to begin gaining financial independence from the state by returning to third level education. I am now in 2yr but my maintenance grant has been slashed by 60% compared to last year given that I am no longer entitled to the non adjacent rate.
This leaves me in an incredibly difficult financial situation at a time when I need to be able to focus on my studies. Education is the only long term solution that will enable me to contribute to back to the exchequer.
On the other hand, there are a number of continuous long term welfare claimants in my local rural village throughout the Celtic Tiger, apparently unquestioned by the state. They are mostly unattached, able-bodied men under 35yrs of age that could easily have relocated for work but choose to rely on social welfare with the odd cash-in-hand job to top up their daily drinking fund (1). This amazed me since I have to justify my circumstances to state bodies bi-anually. I also believe it to be a pitiful waste of human resources that should be challenged regularly and addressed with community service while receiving welfare; volunteering has had enormous benefits for me while in receipt welfare enhancing my sense of pride, wellbeing and productiveness to cope with the undignity of welfare dependancy. However, my attitude to welfare support does not appear to be widely replicated ie: a lone mother of 3 children; state dependant for last 11yrs, is now expecting twins with her new ‘unemployed’ partner (ref:1). Another 2 state dependant children to add the exchequer bill. One of many similar realities I personally know of.
I view such frivilous child bearing on par with politians abuse of expenses funds.
Both of which need to be addressed urgently.
James ,
Great article Ronan. I think its shambolic that we spend nearly as much money encouraging people to raise kids by themselves than we do on the entire 3rd level budget. We’re encouraging young women to make single parenting their career choice, encouraging the birth of more children who are far more likely to grow up in poverty. That may sound harsh but its reality, its an issue and it needs to be addressed. Education is the key to ending inequality, if social welfare is the highest portion of expenditure then it must be reformed, especially in the current climate. One great way to start is just as you expressed: treat all SW income as personal income and tax it. There should be no un-means tested benefits such as child benefit for the rich, and free medical cards for rich pensioners. After that we have to address the negative incentives some of the payments make, an example being the limitless period of unemployment benefit, discouraging people not to get back to work as soon as they can.
Paying tax in Ireland: Where the richest (and poorest) pay | Ronan Lyons ,
[…] of the ten income deciles. It takes into account earned income and transfers/benefits – which as I’ve stated before I believe should be treated as any other income source, to level the playing field between work and […]