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Investment in Qualitydramatically, but the degree of progressivity was lower, producing afall in the overall redistributive effect.Turning to employee PRSI contributions and associated levies,there were significant changes in these deductions over the periodsince 1987. A comparison of 1994 and 1998 shows that the overallredistributive impact of employee PRSI contributions (includinglevies) was lower in 1998 than 1994. This was because both theaverage rate and the progressivity of these deductions had fallenover the period (see Chapter 7).The Distributional Impact of Budgets from 1987 to 2001It is also useful to analyse the distributive impact of tax and welfarepolicy as a whole over the past 15 years18. This is done by lookingat the impact of changes in tax and welfare on different parts of theincome distribution. The focus of the analysis is on tax units, ratherthan households, since the tax and welfare systems do not, for themost part, operate on a household basis.In carrying out their analysis, the benchmark used by the ESRI is toindex tax and welfare parameters to the growth in average earnings(broadly defined). Using this benchmark, they look at three subperiods:1987-94, 1994-98 and 1999-2001. Figure 2.8 examines thegains, relative to the “distributionally neutral” benchmark, for eachincome decile during each sub-period. The 1987 to 1994 period wasone in which income tax rates were cut and social welfare paymentrates were streamlined, with special increases for those on thelowest rates, as recommended by the Commission on SocialWelfare. This is the main factor behind the high percentage increasein income in the lowest income decile. Low-to-middle incomegroups fared less well than under a wage-indexed policy; indexationof tax allowances would have been of greater value to this groupthan the tax rate cuts actually implemented. The size and structureof the tax cutting packages gave gains to upper middle and highincomegroups, with the proportionate gain rising with income.18. The following section draws on NESC analyses of the distributive impactusing the SWITCH tax-benefit model (Callan and Nolan (1999), Callan et al.(1999), and Callan and Nolan. (2000))122