This document analyses the Budget 2011 tax/welfare package using the SWITCH tax/benefit model. It looks at:
- the distributive impact of the measure based on a ranking of all families in 10 equal sized groups from poorest to richest. The following issues are considered: the percentage change in family income, the aggregate income change, the percentage of affected families and the cash changes for affected families.
- the impact on families characterised by a) family composition and b) employment status.
- Finally, the impact on the at-risk-of-poverty rate and the poverty gap of the various tax/welfare options. This impact is disaggregated by age (children, working age, older people) and by gender.
The comparator policy a 2010 policy indexed by wage trends for 2011 (minus 1 per cent). This ‘neutral budget’ is considered best for assessing the impact of policy while taking into account income trends in the economy for 2011.
Finally, the run settings for all analyses is 2011, which reflects forecast trends in terms of employment, population and family income.