Gender Impacts of National Budgets

Sinéad PentonyHead of Policy, TASC

4th March 2011This project is co-funded by the European Union’s PROGRESS Programme (2007-2013)

The information contained in this presentation does not necessarily reflect the position or opinion of the European Commission.

Budgetary Goals• Budget 2011 (indeed all budgets) have a number of

sometimes competing goals• Examples include:– Reduce the deficit in a responsible and credible manner

(balance the budget)– Foster economic recovery (generate growth and jobs);– Maintain/enhance quality of life without compromising

sustainability– Increase economic equality

• There may be tensions between goals and different parties may have different goals

Economic Equality• A key budgetary goal is to enhance economic

equality. There are numerous equality dimensions:• Gender• Age• Geography (e.g. urban/rural or Dublin/West of Ireland• Socio-economic background• Ethnicity• Sexuality• and other characteristics

• Closer economic equality can be achieved through manipulation of the tax system, through changes to social transfers, or through the provision of general public services.

How can we Measure Economic Inequality?• Available data sources are limited:– Survey of Income and Living Conditions (SILC)

• SILC breaks down the sources of income into broad categories

• It also tells us ‘who’ is receiving this income and how much

• But economic equality is not just determined by income: – Tax system– Social transfers– Wealth, – Access to and cost of public services– Costs of living

Principal economic status by gender, 2010

Persons aged 15 and over

Income liable for social insurance, 2008persons aged 15-84

Income Band Men (%) Women (%)

€0 - €19,999 37.7 50.3

€20,000 - €49,999 42.7 39.0

€50,000+ 19.6 10.7

Average income € 35,966 25,077

Income liable for social insurance, 2008persons aged 15-84

Average income liable for social insurance by age, 2008

Age group Men WomenWomen's income

as % of men's

15-24 13,372 11,622 86.9

25-34 31,077 27,475 88.4

35-44 46,494 31,498 67.7

45-54 51,860 30,736 59.3

55-64 46,657 26,580 57.0

65-84 22,415 15,520 69.2

Total aged 15-84 35,966 25,077 69.7

Budget 2011Key measures (selected):• €10 reduction in Child Benefit rates

• €8 cut for social welfare, jobseekers payments

• Income/health levies to be replaced by single universal social charge: – Rates on the charge were announced as: – 0% below €4,004 per year – 2% up to €10,036 per year– 4% from €10,036 to €16,016 per year– 7% above this level

Budget 2011

• Value of tax bands and credits to be reduced by 10%

• DIRT increased by 2%• Carer's Allowance for those under 66 to be cut

by €8 to €212 per week • Disability Allowance being cut by €8 to €186 a

week• Removal of the PRSI contribution ceiling,

previously €75,036.

Identifying Budgetary Impacts• What is the policy measure?– Tax credits reduced by 10%

• What is the size of the impact?– Flat €360 cut for all employees earning over €18,300– Smaller cut for employees earning between €16,500 and

€18,300– No cut for employees earning less than €16,500

• Who does it impact?– As a percentage of gross income it will have the largest

impact on the €17,850 to €24,000 group (over 1.5%)– The percentage cut falls as the income of the employee

increases

Identifying Budgetary Impacts

• How does the policy interact with other measures?– Cumulative effect with other revenue gathering changes

and cuts to social transfers (e.g. child benefit)

• Who does it impact?– As a percentage of gross income it will have the largest

impact on the €17,850 to €24,000 group (over 1.5%)– The percentage cut falls as the income of the employee

increases

• How does the policy interact with other measures?– Cumulative effect with other revenue gathering changes

and cuts to social transfers (e.g. child benefit)

Costs/Benefits of Policy Measures • Impact on Government finances

• General impacts– For example education spending– Difficult to measure benefits to the individual

• Specific impacts– For example tax breaks or social transfers– Who benefits and who loses?

• Child benefit cut will primarily effect women• Removal of the PRSI ceiling will primarily effect men

– How much?

• Indirect impacts– For example the reduction in the minimum wage will cost the

Government through additional Family Income Supplement (FIS) payments

Sample Impact: Tax Credits• We can identify which income groups will be most

affected– €17,850 to €24,000 group for employees (over 1.5%)

• And least affected– Employees earning under €16,500– High earning employees

• Therefore estimating the gender impact of the reduction in tax credits for employees is simply a matter of: – identifying the gender breakdown of the income distribution

and – quantifying the impact on each income level

Tax credit change: Impact as percentage of income

(single employees)

Distribution of individuals annual employee income (Female)

Distribution of individuals annual employee income (Male)

Equality Proofing the Budget Transparency

Systemic change is required:• Reform budget documentation– Easy access by the general public

• Single source of information for all state revenue, expenditure, assets and liabilities– Provide data for analysis by business and civil society

• Equality Statement with every Budget– Distributional impact of Budget measures across gender, age

and other categories• Equality impact of each policy measure

Medium Term Prospects• €9 billion+ budgetary adjustment likely in the next three to

four years

• How we do it is at the discretion of the Government?

• The composition of this adjustment between public expenditure cuts and tax increases will have major implications for the level of economic equality between genders

• An emphasis on cutting public services will impact more on women as women tend to be more reliant on public services than men

• A greater focus on direct taxation will impact more on men as high earners are predominantly male

Gender Impacts of National Budgets

Sinéad PentonyHead of Policy, TASC

4th March 2011This project is co-funded by the European Union’s PROGRESS Programme (2007-2013)

The information contained in this presentation does not necessarily reflect the position or opinion of the European Commission.