A fairer tax system would provide sufficient resources to address child poverty and child care as well as helping the "working poor", the Justice Commission of the Conference of Religious in Ireland (Cori) will say today.
In its latest policy paper on the taxation system, to be published today, Cori will say the three major social justice issues facing the Government - child poverty, childcare and the working poor - could be tackled "without increases in income tax or corporation tax rates".
A growing proportion of households experiencing poverty are headed by people in employment. These are the "working poor".
Cori will say that by simply making all tax credits refundable, the resources would be handed to the people that needed them and "the child poverty, child care and 'working poor' issues" would be addressed.
Making tax credits refundable would mean changing the taxation system so that people who do not pay tax because their income is too low or because they are dependent on social welfare benefits would be entitled to a payment of the credit value that they would have been entitled to were they paying tax.
For example, the One Parent Family tax credit is worth €1,580 this year, but only to those paying tax. Cori says this should be made refundable - ie its value paid to one-parent families who do not pay tax.
Fr Seán Healy, director of the Justice Commission, will go on to say parts of the tax systems are "skewed dramatically to benefit the better off", and that this should change.
For example, looking at the tax reliefs available for having a personal pension, Cori calculates that the poorest 20 per cent of households get no benefit from this relief, while the richest 40 per cent of households get 89 per cent of the overall value of this scheme.
Cori also estimates that "at least €2 billion would be available to the Exchequer" if all tax reliefs were standard rated at 20 per cent, ie available to people paying tax at the 20 per cent rate. Currently many credits are available only to people paying tax at the 42 per cent rate.
According to Cori, other initiatives that should be taken include:
a move towards introducing a carbon tax and a land rent tax, the proceeds from which could be used to reduce income tax
addressing the issue of windfall gains from rezoning
taking steps to avoid getting caught up in a "race to the bottom" which could see corporation tax being reduced to zero because of competition from some EU countries
meeting the National Anti-Poverty Strategy commitment to raise the lowest social welfare rate for a single person to 30 per cent of gross average earnings.
According to Fr Healy, the introduction of tax credits was an example of positive change.
