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Public spending drop 'will undermine services' ability to tackle social crisis'

Falling public spending will undermine the ability of public services to deal with social crises, a think tank said.

More than half the income gains of the last five years have gone to the top tenth of earners, Think-tank for Action on Social Change (TASC) added.

TASC policy analyst Cormac Staunton said: "While income tax and Universal Social Charge mitigate this, the regressive nature of the tax changes announced in Budget 2016 give the greatest benefit to higher earners, and undermine the ability of the tax system to deal with rising market inequality."

The report said three-quarters of the pre-tax income gains in the last five years have gone to those earning 70,000 euro and above.

Key findings of the analysis include:

:: A single earner on 70,000 euro will gain 902 per year which is 2% of their take home pay.

:: A single person on a middle income of 25,000 euro will gain 227 for the year, about 1% of their take-home pay.

:: A person on 35,000 euro will gain 377 - just over 30 per month or 1.3% of their take home pay.

In the run up to the Budget, TASC recommended focusing on increased public spending rather than on tax cuts.

Report co-author and TASC policy analyst Dr Rory Hearne said: "While there are some welcome announcements, particularly in the area of childcare, the increase in spending is insufficient to address the various social crises and austerity-related underinvestment.

"The spending allocations for future years show that there are no plans for significant increases and that spending will in fact fall as a proportion of GDP.

"According to the Government's own figures, by 2019 we are likely to end up with the lowest government expenditure in the EU at just over 30% of GDP, against a Euro area average that will be closer to 50%."

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