Reaction from TASC social change think tank

TASC’s Director Dr Nat O’Connor said “Tax changes in Budget 2014 were a mixture of progressive and regressive measures. Reductions in tax breaks for private pensions and medical insurance are progressive, as these breaks are enjoyed more by higher income households. Likewise DIRT increases affect those with more wealth. But the levy on banks risks being passed on to customers and most spending cuts will disproportionately harm people on lower incomes, increasing economic inequality.

“The new lower €100 rate Jobseekers Allowance for young people in Budget 2014 assumes opportunities for all that do not exist. It is also inequitable to discriminate against any age cohort of adults.

“Demographic pressure is looming behind all the big spending departments. It will be hard to maintain levels of quality public services without more far-reaching tax reform in future years.” Dr O’Connor concluded.

TASC’s Senior Policy Analyst Dr Tom McDonnell said “Ireland’s last bailout budget seems to be even more of a compromise than in previous years. Various atypical budget measures have been added to the mix to reach the target.

“The Government’s stated commitment to counter aggressive tax planning is welcome, but the devil will be in the detail. Hopefully this marks a shift in policy towards a more sustainable industrial policy as facilitating tax avoidance by multinationals is an unethical and unstable basis for growth and recovery. This policy will need to be carefully watched.

“It is important to remember that the €2.5 billion of annnounced measures still represents 1.5 per cent of GDP and this will cause a significant contraction in the economy, and loss of jobs and growth.

“Budget 2014 promised investment stimulus, but much of this seems focused on the failed and inequitable strategy of tax breaks, which is disappointing. Ireland has the lowest investment in the EU. More is needed to foster major investment in productive sectors.” Dr McDonnell concluded.