The 2006 budget has redistributed more towards people on low incomes than any other budget since the Fianna Fáil-PD Government came to power, according to new research by the Combat Poverty Agency.
The Budget, which included large allocations for welfare and child support, shows the Government is well on its way to reducing income poverty in line with best European practice.
While those in the lowest income groups saw their disposable income rise by between 6 per cent and 7 per cent in Budget 2006, this compared to an average rise of 2 per cent for all households. The richest income group received an increase of less than 1 per cent.
The redistributive nature of the Budget reflects steps taken in the last three years, but is in stark contrast to trends in budgets between 1998 and 2002, the agency says in a research paper published yesterday.
In 1998 to 2002 gains were concentrated among middle- and higher-income groups (10 and 11 per cent) compared to those on lowest incomes (between 2 and 6 per cent).
Jim Walsh, Combat Poverty's head of research and policy, said budget policy since 2003 had "diametrically reversed" this pattern by improving the position of low-income households to the extent that some of the richest have been modest losers.
"We could not get a starker contrast between these two eras, so there has clearly been a policy shift at Government level."
He sounded a note of caution, however, that indirect taxes and other costs, such as bin charges, could erode gains for the less well-off.
The last four budgets, he said, have reduced the rate of income poverty by between 2 per cent and 6 per cent at various income thresholds. The poverty gap had also been reduced during this time by between 1 and 1.5 per cent. This contrasted with 1998 to 2002, when income poverty grew by up to 3 per cent.
Mr Walsh said the scale of these reductions was significant, adding that buoyancy and tax measures meant further moves could occur in the years ahead.
"These potential tax revenues [from closing off tax loopholes], together with ongoing buoyancy in the Exchequer finances, provide the resources for 'pain-free' redistributive tax and welfare policies in the years ahead."
