Wednesday 16 April 2014

Austerity has wiped 11pc from average family income

AUSTERITY measures have cost most households over 11pc of their income, with high and low earners losing the most.

A new Economic and Social Research Institute report to be published today sets out the grim impact of tax hikes and welfare and pay cuts since 2008. And it also finds that poorer families will lose the most from the most recent Budget, which will cut their incomes by 2pc next year.

The study is the first to analyse the cumulative impact of all government austerity measures over the past five years including indirect tax increases such as VAT and carbon as well as income tax, DIRT tax, capital gains tax and cuts to social welfare and public sector pay.

It found that the net impact of all the cuts is not progressive -- while rich people have lost the most, the poor have been squeezed more than middle-income families. "It shows that, contrary to popular perception of the squeezed middle, in fact it's more the squeezed low and high earners," said report author Professor Tim Callan.

The report, 'Distributional Impact of Tax, Welfare and Public Service Pay Policies: Budget 2014 and Budgets 2009-2014', shows nobody has escaped the recession unscathed. High earners lost the most with their incomes down by over 15pc since 2008, while the 10pc of the population on the lowest incomes suffered losses of 12.5pc. The vast majority of middle-income households saw their incomes decline by between 11pc and 12pc. The results of the most recent Budget are quite different, however, as it is the poor who will suffer most with their incomes down by 2pc, while the rich were hit with a 1.75pc drop and most people will see a loss of just over 1pc.

The study also takes into account the impact of the loss of the Christmas social welfare bonus -- but Taoiseach Enda Kenny yesterday ruled out bringing this back.

Mr Kenny said "somebody's got to pay" for the €261m cost if this was brought back.

He said that it would be "lovely" from a political point of view to restore the double social welfare payment at Christmas, but it was just not possible.

"We can't go to the kind of the situation we had in the past where there was an assumption that everything was available for nothing," he said. The issue of re-instating the Christmas bonus has been put on the agenda after Independent TDs such as Thomas Pringle and John Halligan said it would help people facing hardship after years of social welfare cuts.

Irish Independent

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