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CORI Justice: statement on the Irish Government-funded Reports for the Working Group on Basic Income

CORI Justice statement on the Irish Government-funded Reports for the Working Group on Basic Income.

March 26th, 2001.

The following are the points contained in the CORI Justice Commission statement:

CORI Justice Commission has welcomed the Final Report of the Working Group on Basic Income.

In particular it has welcomed the fact that the Report vindicates CORI Justice Commission’s claims that a Basic Income system would have a far more positive impact on reducing poverty than the present tax and welfare systems.

The ESRI study done for the Working Group found that a Basic Income system would have a substantial impact on the distribution of income in Ireland in that, compared with the present tax and welfare system it would:

  • Improve the incomes of 70% of households in the bottom four deciles (i.e. the four tenths of the population with lowest incomes) and
  • Raise half of the individuals that would be below the 40% poverty line under ‘conventional’ options above this poverty line.

According to the Report, these impacts would be achieved without any resources additional to those available to ‘conventional’ options.

The Working Group’s Report also found that the tax rate (including PRSI replacement) required to fund Basic Income, based on January 1999 estimates, would be 47%. Since then the economy has grown significantly and the revised rate, based on Revenue Commissioners estimates of the tax base, is 42.7%.

This shows that a Basic Income system is far more effective at tackling poverty and should form part of a comprehensive strategy to totally eliminate income poverty in the years immediately ahead.

Government should now honour its commitment to publish a Green Paper on Basic Income. Implementation of this commitment has been delayed pending receipt of this Working Group’s Report. Now that its results are available it should be relatively easy for Government to publish its long-promised Green Paper.

The Report should also be considered by the National Economic and Social Council (NESC) as it prepares its study on the medium-term development of the tax and welfare systems. This study was promised as part of the new national agreement, The Programme for Prosperity and Fairness (PPF).

Looking at the ‘losers’ identified in the Report, there are two key issues that need to be borne in mind:

Over a three-year implementation period of a Basic Income system all the ‘losers’ would be better off than they are at present. They would simply not gain as much under Basic Income as they would under the present system.

The ‘losers’ in the bottom four deciles identified in the Report can be easily targeted and compensated through the Social Solidarity Fund that forms part of the Basic Income structure

On the macro-economic aspects the Report itself acknowledges that the findings were very tentative, speculative and hard to quantify. However, it welcomed the Report’s conclusion that a basic income system could encourage some people to move from the unofficial economy into regular employment.

For CORI Justice Commission the critical test of any tax and welfare system is its impact on people with lower incomes. While many poor people have benefited from developments of recent years, especially through employment, the fact remains that the gap between poor people and the rest of society has been widened over the past twelve years.

While the proportion of the population described as “consistently poor” has been declining the percentage of households and persons below every income poverty line measured by the ESRI is higher now than it was in 1987. This situation must be reversed immediately. Obviously, the introduction of a Basic Income system would have an immediate and positive impact on those most in need in Irish society.

The choice between a Basic Income system and ‘conventional’ tax/welfare options is a trade off between greater equity and a risk of lower economic growth versus less equity and less risk to higher economic growth. At a time when there so much concern is expressed about the country’s growth rate being unsustainable, the argument in favour of introducing a Basic Income system is further strengthened.”

CORI is a Social Partner and was one of the organisations that negotiated and signed the last two national agreements i.e. Partnership 2000 and the Programme for Prosperity and Fairness. It represents more than 135 religious congregations with 12,000 members in 1,400 communities throughout Ireland

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