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Recent research focused on a number of key areas for the tax and welfare response to the current economic crisis, including property taxation, the universal social charge and the distributive impact of policy responses to the crisis. The SWITCH tax-benefit model was used extensively to explore policy options and analyse policy choices. In 2010 the model was rebased to use information from the latest available CSO data [2008]. The model was made available to the Departments of Finance and Social Protection, and training and support in model use was provided. Key policy issues were examined in a number of publications, producing findings on the potential impact of possible changes to policy, and identifying the impacts of actual changes in policy. The potential role of a property tax was examined ("What Role for Property Taxes in Ireland?"), paying particular attention to the issue of “ability to pay”, which is one of the main objections raised to the introduction of such a tax. Analysis using SWITCH showed that an income-related waiver could help to address this issue, while still generating substantial revenue. The distributional impact of tax, welfare and public sector pay policies since 2009 (Budget 2009) was also examined ("Inequality and the Crisis: The Distributional Impact of Tax Increases and Welfare and Public Sector Pay Cuts"). Overall this response was found to be progressive i.e., policy imposed greater reductions in net income on higher income groups over the period. There were differences over the period: responses during the years 2009 and 2010 were, for the most part, strongly progressive. The distributive impact of the response in Budget 2011 was broadly proportional – similar percentage changes across the main income groups. David Miles (Bank of England), Frances Ruane (Director) and Tim Callan at the ESRI FFS 'Budget Perspectives 2011' Conference, October 2010 Research undertaken in this area helped to inform public debate on tax and welfare policy issues. The SWITCH model was used in the preparation of Budget 2011, with analyses from the model supplied as part of the Budget 2011 documentation. In addition, the model was used in the ‘Review of Child Income Supports’ completed by an interdepartmental group in December 2010. A detailed examination of the impact of a universal social charge was presented at the ESRI FFS ‘Budget Perspectives 2011’ Conference, held in October 2010.
Work on the modelling of pension policies continued, under a programme co-funded by the European Commission’s Directorate-General for Employment, Social Affairs and Equal Opportunities. The work is being undertaken in collaboration with researchers at the National Institute of Economic and Social Research (NIESR). The aim of the project is to adapt and calibrate the model developed at NIESR in order to analyse policy issues in an Irish context. A new project, updating the integrated network of tax-benefit models known as EUROMOD, was initiated, funded by the European Commission’s Directorate-General for Employment, Social Affairs and Equal Opportunities. The skills of the Irish team are being used to allow a streamlined model of the Irish tax-benefit system to be constructed using data released by Eurostat from EU SILC. This will allow comparative work on tax and welfare issues to be undertaken by Irish and international researchers. Future Research
Programme Coordinator – Tim Callan
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