Lower-income households will be worse off unless budget one-off payments are repeated, ESRI warns

• Author: Dominic Coyle
• Published date: 30 September 2022
• Publication title: Irish Times: Web Edition Articles (Dublin, Ireland)

The ESRI says this is because increases to tax credits and regular weekly welfare payments announced for next year were below the forecast for inflation, leaving people poorer off after the once-off cost-of-living package is stripped out

But those cost-of-living measures announced in Budget 2023 will insulate most households from rising prices this winter, according to new research presented on Friday at its post-budget briefing.

"Our research shows the Government's approach to insulating households from the recent rise in energy prices has been effective," said Barra Roantree, a research officer at the think tank. "Targeted welfare measures combined with universal household energy credits will do more for most lower-income households this winter than had welfare payment rates risen in line with inflation both this year and next."

Cushion for incomes

"The one-off measures announced as part of Budget 2023 will substantially cushion real incomes," said Karina Doorley, a senior research officer at the ESRI.

"However, most of the permanent changes to tax and welfare measures benefit those on higher incomes. Policymakers may need to consider benchmarking social welfare payments once the inflation crisis has passed to ensure that they provide adequate income for recipients."

The ESRI said the effect of freezing PRSI and most universal social charge bands by Minister for Finance Paschal Donohoe was to reduce the after-tax purchasing power of lower earners who do not earn enough to pay income tax, though it acknowledged that some of this group would benefit from an increase to the minimum wage.

Meanwhile, the...