Fianna Fáil Spokesperson on Social Protection, Willie O’Dea TD, says a stimulus package aimed at the lowest paid is the only way to resolve the social welfare crisis facing the Government.
Deputy O’Dea has urged Minster Joan Burton to be proactive in reforming the welfare system by tackling the ever worsening poverty trap.
The European Commission has called on the Government to tackle the crisis in the welfare system and broaden the tax base to bridge Ireland’s huge budget deficit.
Deputy O’Dea commented: “We need to eliminate the poverty trap in Ireland. There are two approaches; the first is to squeeze the social welfare payments; the second option is to help the working poor, which in these circumstances is the only viable option.
“There are 700,000 people in Ireland below the poverty line, the vast majority of those on social welfare are below the poverty line. If you reduce social welfare, it increases the poverty gap and the situation gets progressively worse.
“I propose a system of refundable tax credits within certain parameters. It would involve directly paying those whose income level means they cannot fully utilise the tax credit system. This would involve a €150 million investment but it would be a huge stimulus for those in the lower income bracket. It would widen the tax bands and would offer those at the lower end of the new tax band a financial top up in lieu of their unused credits.
“This package would benefit 120,000 people on lower incomes, I estimate individuals would receive a maximum of €46 per week in unused tax credits. There would be three immediate benefits to this stimulus package; firstly it would bring more equity to the tax system and broaden the tax base; secondly it would widen the gap between the lowest paid workers and those on social welfare thus making it more attractive to work; thirdly; it would provide a stimulus to the economy, people availing of this package would have more disposable income to spend in the economy.
“I would encourage Minister Burton to take this suggestion on board; squeezing the social welfare recipients is not an option as they can’t afford to take any more cuts. Widening the tax base is the only option and this package does just that.”