Gender Impacts of National Budgets

Sinéad Pentony Head of Policy, TASC 4 th March 2011

This 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 Home duties Student At work Retired Unemployed

Men

0%

Women

25% 50% 75% 100%

% of category

Income liable for social insurance, 2008

persons aged 15-84

Income Band Men (%) Women (%)

€0 - €19,999 €20,000 - €49,999 €50,000+ 37.7

42.7

19.6

50.3

39.0

10.7

Average income € 35,966 25,077

Income liable for social insurance, 2008

persons aged 15-84

Under €5,000 €5,000 - €9,999 €10,000 - €19,999 €20,000 - €29,999 €30,000 - €39,999 €40,000 - €49,999 €50,000 & over Total 0% Men Women 25% 50% 75% 100%

% of category

Age group 15-24 25-34 35-44 45-54 55-64 65-84 Total aged 15-84 Men 13,372 31,077 46,494 51,860 46,657 22,415 35,966 Average income liable for social insurance by age, 2008 Women 11,622 27,475 31,498 30,736 26,580 15,520 25,077 Women's income as % of men's 86.9

88.4

67.7

59.3

57.0

69.2

69.7

Budget 2011

• Key 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

10% and

credits

to be reduced by

DIRT

increased by 2%

Carer's Allowance

for those under 66 to be cut by €8 to €212 per week

Disability Allowance

week being cut by €8 to €186 a 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

2 1,8 1,6 1,4 1,2 1 0,8 0,6 0,4 0,2 0 Tax credit change: Impact as percentage of income (single employees)

Distribution of individuals annual employee income (Female) 30 25 10 5 20 15 0 2,000 6,000 10,000 14,000 18,000 22,000 26,000 30,000 34,000 38,000 42,000 46,000 50,000 54,000 54,001+

5 0 15 10 30 25 20

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 Pentony Head of Policy, TASC 4 th March 2011

This 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.