In the run in to the 2016 Budget, Ignite Research have been running the People’s Budget, giving every Irish citizen a voice in how they would prefer to allocate the €1.5 billion additional spend by the exchequer. People have been telling us how they would split their budget across government expenditure and taxation measures.
We have been capturing the voting intentions of people participating in the People’s Budget, and with the general election looming we wanted to look at the decisions different political party grass root supporters would prefer to see in the budget. Also we wanted to assess if individual parties alternative budgets speak more to their own grass roots or to a more populist audience.
Will the budget which is announced by the Fine Gael and Labour coalition on 13th October speak to the national desires or to their own individual party grassroots?
Increased expenditure or tax cuts
The desired allocation of €1.5 billion additional spending in 2016 from the Irish people is to increase expenditure by €887 million and decrease taxation by €613 million, or a 59%:41% ratio.
There are minor, but no notable differences across various party supporter bases when looking at the desired overall level of adjustment between expenditure and taxation. However when the major items of expenditure and taxation are looked at in some detail, there are some interesting differences in the choices that different party supporters would like to see.
Social Protection, Health and Education & Skills
These three expenditure items account collectively for 81% of current expenditure, and looking at these large cost centres uncovers interesting preferences and priorities among political bases of various parties.
Social Protection, at €19.4 billion, accounts for 39% of budget spending. The People of Ireland want to see an extra €128 million allocated to Social protection. Sinn Féin voters want to see the largest increase in Social Protection spending, with €212 million sought (a 65% increase versus all Irish adults). Undecided voters, want to see the smallest extra allocation to Social Protection, with €102 million allocated (20% decrease versus all Irish adults).
Health expenditure accounts for 26% of budget spending at €13.1 billion per annum. The People’s Budget calls for an extra €370 million in health expenditure. Sinn Féin voters, as with Social Protection, want to see the largest increase in Health expenditure at €459 million (24% higher than all adults). Conversely Fianna Fáil voters want to see the most modest increase in health expenditure at €333 million (10% less than all adults).
Finally looking at Education & Skills, the €8.3 billion spend here equates to 20% of total expenditure, and the People’s Budget calls for an overall extra €202 million to be spent here in 2016. Fianna Fáil voters want to see the largest increase here at €243 million (20% higher than all adults), and Fine Gael voters want to see the most modest increase in spend here at €169 million (17% less than all adults).
Income Tax, VAT, Excise Duty, Corporation Tax
These four tax measures account for 88% of all taxation generated by the state.
Income tax is 44% of total tax take at €18.4 billion. Overall Irish adults want to see a decrease of €299 million. Labor voters want to see the biggest reduction in income tax, looking for €373 million reduction (25% more than all adults). Sinn Féin voters want to see the most modest reduction in income tax at €237 million (21% less back to workers than all adults want).
VAT generates €11.6 billion or 26% of taxation, and overall The People’s Budget calls for a reduction of €135 million in VAT. Independent voters want to see the biggest reduction of any political base here in the order of €162 million (20% more relief than all adults). Labour voters are those calling for the shallowest relief in VAT at €77 million reduction (43% less than all adults).
Excise duty generates €5.3 billion and 12% of all taxation. Overall Irish adults want to see a modest adjustment here, but an adjustment that would increase the level of tax generated from Excise duty by €7 million. Fine Gael supporters want to see the largest increase in taxation here, with an increase of €47 million. Their coalition partners conversely want to see a reduction in Excise duty of €19 million.
The final area we want to look at is Corporation tax. Generating €4.7 billion and 10% of all taxation, overall Ireland wants to see an increase of €24 million being raised from Corporation tax. However looking at the extremes, we see that Labour supporters want to see the largest increase in Corporation tax seeking €10 million to be generated here, while Fine Gael are looking for a reduction of €47 million from Corporation tax.
Pre-Budget Submission Analysis
Both Sinn Féin and Fianna Fáil have published their alternative budgets late last week. Looking at what their voter base want versus some of the elements in their submissions we have picked out some potential talking points.
Sinn Féin supporters are among the cohort seeking the highest spend in health - €459 million. Despite the Sinn Féin budget being on target for populations' wishes for health, they are proposing an under investment for their supporter base by about €76 million. However, the Sinn Féin adjustment in education and skills is very closely aligned with what all Irish adults are seeking of €370 million.
Proposed health expenditure increases from Sinn Féin are €22 million less than the €202 million adjustment sought by all adults, and €24 million less than what is sought from Sinn Féin voters.
Fianna Fáil pre budget submission appears to be over investing in Social Protection and under investing in Education for their support base.
However, Fianna Fáil are closely aligned on health spending increases for their supporters but are still some distance from what all voters would like to see.
Fault lines in the Coalition of Fine Gael and Labour?
There is a seemingly polar opposite and conflicting set of priorities within the coalition partnership of Fine Gael and Labour on Excise duty and Corporation tax in particular. Labour voters are seeking the biggest decrease in Excise duty and increase in Corporation tax, while Fine Gael voters want to see the biggest increase in Excise duty and biggest decrease in Corporation tax.
In addition to this Excise/Corporation tax difference of opinion, Labour are seeking the largest decrease in income tax relief to the tune of €373 million, while Fine Gael voters are only looking for €281 million reduction in income tax.
The actual budget decisions to be made will be interesting to watch how these potential fault lines may be neutralised or exasperated. With an election looming in potentially weeks and a pre-election pact in place between Fine Gael and Labour, already under strain around the timing of the election, the budget could be a key test for the coalition grass root supporter bases.
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