In 2010, the Government used the financial assistance it received from the EU-IMF bailout to recapitalise and stabilise key domestic banks.1 No human rights or equality assessment was undertaken to gauge the potential impact of this decision on the most marginalised sections of society2 although the Government’s National Recovery Plan adopted in 2011 described the measures adopted as ‘proportionate’.3 It is clear, however, that this was not the case as austerity measures have been most detrimental to the poorest ten per cent of the population who suffered an 18 per cent reduction in ‘average real income’ from 2008 to 2011.4
Measures taken at EU level have also had a negative impact on the State’s maximisation of its available resources in terms of Article 2(1) of the Covenant. In December 2011, the ‘Six Pack’ (a series of secondary legislation) supplemented the Treaty on the Functioning of the European Union (TFEU), which provides for a Stability and Growth Pact, by introducing expenditure benchmarks as well as new minimum standards for budgetary frameworks.5
In 2012, Ireland ratified the Fiscal Compact Treaty, a mechanism developed to strengthen fiscal surveillance among Member States.6 Compliance with this Treaty means Ireland has to reduce its deficit to three per cent of Gross Domestic Product (GDP) by 2015, and will face sanctions if its public debt rises above 60 per cent of GDP. In 2013, the ‘Two Pack Regulations’ were introduced in Eurozone States to provide closer budgetary monitoring by the European Commission. These measures have led to the introduction of expenditure ceilings to reduce budget deficit. The introduction of expenditure ceilings has impacted on the level of funding available to specific Government Departments7 and resulted in harsh cuts within a relatively short period of time.
Ireland has one of the lowest tax-takes in the EU, with a 28.7 per cent tax-to-GDP ratio in 2012.8 If this ratio is to be maintained, then in order to achieve its budget deficit target, the Government will have to make further cuts to public spending rather than raise additional funds through taxation.
The UN Independent Expert on Extreme Poverty and Human Rights in her report on Ireland described as ‘critically important’ the need for the Irish Government to ‘adopt taxation policies that adequately reflect the need to harness all available resources’ in order for the State to meet its obligations under the Covenant and protect the most vulnerable from further harm.9 Despite this recommendation, the direct taxation system in Ireland while found to be progressive,10 is offset by indirect taxation which has been found to be regressive.11 People on the lowest incomes pay 31 per cent of their overall income in tax while the highest earners contribute less than 30 per cent of their total income.12 In addition, poorer people in Ireland are disproportionately impacted by hidden charges not considered to be direct tax measures meaning they also have less spending power to pay for basic necessities. As a result, low income individuals and families are being pushed below the poverty line.
FLAC urges the Committee to recommend the State:
Amend the tax regime to maximise available resources to protect and promote human rights and ensure the regime does not impact disproportionately on poorer sections of society.
1 European Union/International Monetary Fund Programme of Financial Support for (2010) Ireland: Programme Documents, Dublin: Merrion Street.
2 Address by Des Hogan, Acting Chief Executive of the IHRC, ‘Human Rights and Austerity in Ireland: response to CESR paper’, 12-13 June 2013.
3 Government of Ireland (2011) National Recovery Plan 2011-2014, Dublin: Stationery Office, p.8.
4 Callan, T. et al (2013) ‘The Great Recession, Austerity and Inequality: Evidence from Ireland’, Intereconomics, Vol. 48, Issue 6, November/December 2013, pp.335-338, Berlin: Springer.
6 The Thirtieth Amendment of the Constitution (Treaty on Stability, Coordination and Governance in the Economic and Monetary Union) Act 2012 was passed by 60 per cent of voters and the Fiscal Responsibility Act 2012 was enacted.
7 Department of Public Expenditure and Reform (2013) Expenditure Report 2014: Part III - Ireland’s Public Expenditure Framework in Comparative Perspective, Dublin: Department of Public Expenditure, p.90.
9 Office of the High Commissioner for Human Rights (2011) Report of the UN Independent Expert on Extreme Poverty and Human Rights, Magdalena Sepúlveda Carmona to the Human Rights Council, Geneva: OHCHR, p.8.
10 The highest earners contribute almost 24 per cent of their gross income to income tax and social insurance while the lowest earners pay less than one per cent of their overall income in direct taxes. M. Collins (2014) Total Direct and Indirect Tax Contributions Of Households in Ireland: Estimates And Policy Simulations, Dublin: Nevin Economic Research Institute, p.19.
11 The lowest earners pay almost 30 per cent of their gross income on indirect taxes including Value Added Tax (VAT), excise duties, levies, local taxes and charges compared to top earners who pay less than six per cent. M. Collins (2014) Total Direct and Indirect Tax Contributions of Households in Ireland: Estimates and Policy Simulations, Dublin: Nevin Economic Research Institute, p.19.
12 M. Collins (2014) Total Direct and Indirect Tax Contributions Of Households in Ireland: Estimates And Policy Simulations, Dublin: Nevin Economic Research Institute, p.19.
Last Updated: 22/01/2015 ^ back to top