How can the Commission on Taxation and Welfare deliver a  Socially Just Future Tax and Welfare system?

I recently had the opportunity to present thinking from the community and voluntary sector’s perspective at a seminar of the Commission on Taxation and Welfare. The seminar examined how we can achieve a socially-just tax and welfare system. This blog is based on the text of my presentation at this event and it draws heavily on positions developed by the community and voluntary pillar (of which The Wheel is a member).

The community and voluntary sector consist of thousands of organisations - they work to support people in practical ways and to change public policy for the better.  In doing their work they operate in the context of both the shortcomings and strengths of current tax and welfare policy - and that’s why they are well placed to advise on what’s needed to make our system more effective and fairer. 

Tax and welfare policy has a major effect on shaping our society and economy, so if we are to set fair and coherent priorities for tax and welfare policy, we need a guiding vision of the society and economy we want to create.

When we are clear about the vision, then we can work out how much money we’ll need to raise; how to do that fairly; what we want from tax expenditures; and what welfare supports are needed so everyone can live with dignity and with their human rights respected.

As the Commission on Taxation and Welfare conducts its work we must recognise that:

• Ireland is not a poor country
• our tax-take remains one of the lowest in the European Union
• it is both essential and possible to protect the vulnerable in policy choices we make
• an integrated approach to meeting our country’s challenges, both national and international, and social, economic and environmental, is essential.
• investment on a sufficient scale will be essential, and
• a guiding vision of where Ireland could be in a ten to fifteen-year timeframe is also essential.

So where might we find the guiding vision?

Ireland has signed up to implement the Sustainable Development Goals (SDGs) and in signing up Ireland has said we will be guided by two important principles:

• Firstly - that every person should have a life of dignity and be able to fulfil their potential;
• Secondly - that the economic, social and environmental aspects of life are linked and interdependent.

In putting these principles into practice, Ireland has pledged that no one will be left behind and that we will work to reach those people who are furthest behind first. Reaching the furthest behind first should now be the priority for our tax and welfare system.

What should the priorities be to reach the furthest behind first?

An efficient, integrated welfare and taxation system should ensure that everyone enjoys a pre-agreed minimum essential standard of living which would mean everyone could indeed live with dignity and fully participate in society.

The pathfinding work of the Vincentian Partnership for Social Justice should be adopted and mainstreamed to ensure this objective.

A similar objective should be set for the attainment of a living wage for all, and the work on a guaranteed basic income in the context of artists should be carefully studied to examine its wider application in society

it will be important to benchmark social welfare rates to the minimum essential standard of living to lift people above the poverty line, ensure they can live life with dignity, and meet a minimum essential standard of living.

Our sector is keenly aware that there are particular challenges facing people with a disability, and that the associated costs of living and seeking to participate must also be taken into account a just transition plan for climate change mitigation will be essential. Measures must focus on people with low incomes and people living in rural contexts who will be most impacted by measures associated with decarbonisation.

In general, our housing, health and equality provision suffered from the austerity crisis and they have never recovered, and are now faced with further inflation-related pressures.

How can our tax and welfare system respond? It needs to contribute to ensuring

• A housing system that provides for all affordability levels, family types and age groups
• A universal healthcare system
• A well-funded, accessible and sustainable public transport system
• A quality early childhood care and education sector
• A properly funded education and training system from early years to adult education
• A country-wide broadband system.

There is the need to address structural and emerging inequalities in the labour market, a critical issue as Ireland looks to the jobs of tomorrow, and the impact of COVID-19, automation and digitalisation on the world of work.

The system needs to anticipate the country’s growing older population, especially in the areas of pensions and healthcare.

In conclusion

Ireland’s overall level of taxation will have to rise in the years to come to deal with infrastructure and services deficits. Ireland needs to move in that direction by broadening the tax base as recommended by the European Commission and others and should do so in a just and fair manner.

Actions for consideration could include:

• Reforming tax expenditures (on pensions for example)
• Ensuring a minimum effective tax rate for higher earners
• Reforming corporation taxes
• Introducing a site valuation tax
• Taxing second homes
• Taxing empty properties and under-developed land*

Fairness can be achieved in the tax system by

• standard-rating tax expenditures
• Introducing refundable tax credits
• Making the tax system simpler.

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