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As well as tracking the post-Budget income levels of different households, Social Justice Ireland is also focused on assessing how the income divides in Irish society change following the adoption of Budgetary policies.
There is merit in undertaking this analysis for each Budget and also over multiple years so that the cumulative effect of Budgetary policies is captured. To achieve this, we track two new measures this year, income gaps we plan to monitor and update annually. They provide a useful barometer of income divides in our society.
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The Rich-Poor gap
This gap monitors the income of single individuals on jobseekers’ benefit (‘poor’) and the disposable income (after income taxation and employee social insurance) of a single PAYE worker earning €100,000 (‘rich’).
An annual income of €100,000 is chosen as representing very high income earners – it represents the top 6.5% of earners (180,000 earners) according to Revenue Commissioners data and is well over twice average earnings.
As a result of the taxation and welfare measures adopted in Budget 2023, the rich-poor gap will increase by €3.82 per week (€199 per annum) in 2023. The cumulative rich-poor gap will stand at €979 per week (€51,066 per annum) in 2023.
The gap has widened because the measures in Budget 2023 favoured those on the highest incomes.
It is of note that the combined effect of the emergency energy crisis measures in 2022 saw this gap fall for the first time over the last ten Budgets. However, these temporary measures are not currently scheduled to repeat in 2023.
The Middle-Poor gap
The middle-poor gap monitors the income of single individuals on jobseekers’ benefit (‘poor’) and the disposable income (after income taxation and employee social insurance) of a single PAYE worker earning €40,000 (‘middle’). This middle-income figure approximates the annual value of a worker working full-time and earning the median hourly level of earnings.
As a result of the taxation and welfare measures adopted in Budget 2023, the middle-poor gap remains unchanged. The cumulative middle-poor gap will be €572 per week (almost €30,000 per annum) next year. Overall, the middle-poor gap has grown by a total of €20 per week (€1,032 per annum) over the period 2014-2023.
