Thursday, November 25, 2010

Cash transfers

According to the Household Accounts, disposable income in 2009 was supported by record payments of €26.3 billion in direct cash transfers from the State.  This represents 29.3% of the €89.6 billion net disposable income that households had in 2009 and 15.4% of GNP.  Here is a breakdown of the €26.3 billion in cash transfers provided by the State in 2009.

Cash Transfers

The €26.3 billion paid out by the State to supplement the incomes of those in need (or not in some cases) exceeds the €20.6 billion collected in Income Tax and PRSI contributions from those with earned income. 

Cash Transfers versus Income Taxes

Over the past ten years the proportion of Income Tax and PRSI contributions to GNP has remained relatively stable, and at 15.7% in 2009 were actually greater than then the 15.0% figure of 2000.  On the other side, cash transfers from the State have increased from 9.8% of GNP in 2000 to 20.1% in 2009.

We now have apparently “high-cost” services in a so-called “low-tax” economy.  Much as we’d like, we cannot have both.  I would like to hear social and economic reasons to justify why we should try to balance this inequality rather than have the outcome the result of a piece of arithmetic.  Social welfare recipients and tax payers deserve more than that.

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