2014-04-22 - Socio Economic Review 2014 - Full text and cover - FINAL

Table 4.4: Projected Age Related Expenditure, as % GDP 2010-2060
Expenditure areas 2010 2020 2030 2040 2050 2060
Total pensions 9.3 11.5 11.4 12.5 14.3 15.0
of which:
Social security pensions 7.5 9.0 9.0 10.0 11.4 11.7
Old-age /early pensions 5.6 7.0 7.0 7.9 9.4 9.7
Other pensions 1.9 1.9 1.9 2.0 2.0 2.0
Public Service pensions 1.8 2.5 2.4 2.5 2.9 3.3
Health care 7.3 7.2 7.7 8.1 8.2 8.3
long-term care 1.1 1.3 1.5 1.9 2.3 2.6
Education 6.3 7.1 6.5 6.0 6.5 6.4
other age-related (JA etc) 2.6 3.1 2.0 1.5 1.4 1.3
Total age-related spending 26.6 30.2 29.1 30.0 32.7 33.6
Source: Department of Finance (2013:43) and European Commission (2012:400)
Is a higher tax-take problematic?
Suggesting that any country’s tax take should increase normally produces negative
responses. People think first of their incomes and increases in income tax, rather
than more broadly of reforms to the tax base. Furthermore, proposals that taxation
should increase are often rejected with suggestions that they would undermine
economic growth. However, a review of the performance of a number of economies
over recent years sheds a different light on this issue. For example, in the years prior
to the current international economic crisis, Britain achieved low unemployment
and higher levels of growth compared to other EU countries (OECD, 2004). These
were achieved simultaneously with increases in its tax/GDP ratio. In 1994 this stood
at 33.7 per cent and by 2004 it had increased 2.3 percentage points to 36.0 per cent
of GDP (it stands at 36.1 per cent in the latest figure, see Annex 4). Furthermore, in
his March 2004 Budget the then British Chancellor Gordon Brown indicated that
this ratio would reach 38.3 per cent of GDP in 2008-09 (2004:262); it subsequently
reached 37.6 per cent in 2008 before the economic crisis took hold. His
announcement of these increases was not met with predictions of economic ruin
or doom for Britain and its economic growth remained high compared to other EU
countries (IMF, 2004 & 2008).
4. Taxation 87