1. The Impact of Social Protection Payments on Income Distribution John FitzGerald, TCD and ESRI

2. Composition of Government Expenditure

3. Government Transfers as % of GDP Change 20072008200920102011201220132007-2011 Germany16.015.817.416.715.715.615.7-0.3 France17.417.619.2 19.119.519.91.7 Netherlands9.7 10.711.011.111.511.91.4 UK12.112.614.314.2 14.614.52.1 Ireland11.513.817.717.617.5 16.36.0 Greece14.616.117.617.819.319.818.54.7 Spain11.512.314.415.115.316.016.33.8 Portugal14.114.616.4 17.017.518.42.9 Source: EU AMECO database. GNP is used for Ireland, not GDP.

4. Revenue Commissioners’ Data, Change between 2007 and 2011 Income RangeNumber of TaxpayersAverage IncomeTotal Income 100-150-12.6-0.3-12.8 150-200-13.00.0-13.0 200-275-15.7-0.2-15.9 275+-28.4-15.3-39.4 100+-14.7-9.3-22.6 All Taxpayers-13.4-0.6-13.9

5. Gini coefficient before tax and welfare payments

6. Gini coefficient after direct taxation and welfare payments

7. Conclusions - 1 Big fall in everyone’s income because of crisis Governments decided to increase expenditure on welfare, especially relative to GDP For those on high incomes: numbers fell dramatically; their tax rate increased. A consequence of the fall in tax take from high income earners was that the rest of those with taxable incomes had to pay more tax

8. Conclusions - 2 A consequence of the changes was that: – Without tax and welfare payments there would have been a big increase in inequality, but – Because of the increase in welfare expenditure and taxes there has been a small fall in inequality – This has not been enough to prevent a rise in those at risk of poverty – Unemployment has had a major impact, which public policy on welfare has only partially offset

9. Conclusions - 3 While individual policy changes announced in successive budgets, taken together have not been particularly progressive, the overall impact of government policy on expenditure and taxation has had a progressive impact, reducing inequality