Budget 2022

Abstract

This Article outlines and assesses changes to the tax and welfare system announced as part of Budget 2022. It first looks at the main taxation measures announced before turning to employment, education and social welfare supports. It then considers the effect of the package of measures as a whole on the incomes of households using representative survey data from the Survey of Incomes and Living Conditions run on SWITCH – the ESRI’s tax and benefit microsimulation model – and ITSim – an indirect tax microsimulation model developed jointly by the ESRI and the Department of Finance. The Article concludes with some brief reflections on inflation forecasts and the policy-making process.

Quarterly Economic Commentary, Spring 2022

“…The policies we cannot simulate have an estimated combined fiscal cost of €20 million. This is higher than the 0.05 per cent reported in Roantree et al (2021) as the authors compared the effect of Budget 2022 to a distributionally neutral price-indexed baseline rather than a nominally fixed baseline, as we do in this Box. income gain of 0.25 per cent, benefiting lower-income and rural households most and higher-income and urban households least.…”

Distributional impact of tax and welfare policies: Budget 2023

“…Personal rates of payments for social welfare schemes were increased by €12 per week, with proportionate rises to additional payments for qualifying children and adults. Undifferentiated increases in personal rates of payment have been a recurrent theme across multiple Budgets (see, for example, Roantree et al, 2018;2021). As there is much variation in the rates of payments across the social welfare system, undifferentiated increases have the effect of changing the connection between levels of payments and adequacy in an ad hoc way that generates uncertainty for, and inequality across, claimants.…”