32 counting the costs...
UNITED IRELAND’S ‘€20BN TAX BILL’
A UNITED Ireland would cost over €20bn, putting “huge financial pressure” on people in the Republic and “resulting in an immediate major reduction in their living standards”, a new study claims.
The report by the Institute of International and European Affairs (IIEA) said the outcome would be a “dramatic increase in taxation and/or a major reduction in expenditure” in the South.
It comes following recent polls on both sides of the border which have shown increasing support for unification.
The IIEA report calculates that reunification could cost up to 10 per cent of Ireland’s modified Gross National Income (GNI).
A briefing paper for Ireland’s Commission on Taxation in 2021 stated that GNI amounted to €220 billion in 2019.
Rates
Yesterday, a spokesperson for the new IIEA report said: “Figures in 2019 showed the cost of replacing the Northern Ireland subvention as €10.91 bn.
“If social welfare rates and public sector pay rates were, in addition, aligned it would be €20.625 bn.”
The spokesperson added: “Taking as a basis Northern Ireland deficit figures for 2019, unification would add around 5 per cent of modified Gross National Income (GNI) to the Irish Government’s deficit.
“If rerating of welfare payments and public sector pay rates in Northern Ireland (to align them with those in Ireland) were included, the cost would be almost 10 per cent of modified GNI.
“This would add a quarter to public expenditure in Ireland (total government expenditure in Ireland currently amounts to around 40 per cent of GNI), while producing a very limited increase in revenue.”
Since 2015, modified GNI is a measure of national income that is generally regarded as the most appropriate metric to measure Irish national income, according to economists.
The 2021 briefing paper for the Commission on Taxation “strips out the distorting factors inherent in Gross National Product (GNP) and Gross Domestic Product (GDP).
The paper on the cost of a united Ireland is called Northern Ireland Subvention: Possible Unification Effects.
It is authored by John FitzGerald of TCD and Edgar Morgenroth of DCU.