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Irish Mirror
Irish Mirror
National
Sophie Collins

Blow for Irish workers as proposed scheme means most could face 40% tax on all pay

Research shows that Irish workers could see their wages hit by a 40% tax rate in line with a new universal basic income that has been proposed.

The ESRI has revealed that if the government was to roll out a payment worth €1,200 a month per person - regardless of their income - it would cost the state almost €50bn.

The report suggests that this universal basic income would be offered to everyone over the age of 18 and would be modelled off what is deemed “sufficient to live on".

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The payment would not be means-tested and it is understood that people would not have to be in employment in order to receive it.

The report indicates that in order to afford the rollout of this scheme the lower 20pc rate of tax would have to be replaced with the higher 40pc rate.

It also points out that this Green Party plan also called for the elimination of tax credits.

The report goes on to say the introduction of a basic income for all would call for substantial changes to the tax and welfare systems.

The report says: “Assuming it is paid to every individual aged over 18 in Ireland, a universal basic income set at 60pc of median income in 2019 equates to a monthly payment of €1,200 per person and would have a gross cost of just under €50bn per annum”.

The report lists a number of benefits of setting up a universal basic income, including an end to the lengthy processes of means-testing and the stigma attached to welfare payments.

It would also allow for more financial security, the ESRI says, and would avoid situations where people avoid taking up paid work due to the risk of losing means-tested welfare payments.

The report says it would give people the financial freedom to leave insecure or exploitative work for other jobs.

However, the report does list a number of concerns including that it could lead to some people leaving the labour market.

It suggests that it could lead to lower-income households being financially worse off, which would in turn lead to the need for a supplementary welfare boost.

Speaking about the proposed changes, Dr Paul Redmond, senior research officer at the ESRI said: “Regardless of the type of universal basic income you’re thinking about, it would be very costly and require profound changes to taxes and the welfare system.”

He said the concept receives a lot of attention in public debate but very little is known about the impact of such a ­policy.

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