Some in the media have tried to downplay the benefits of Budget 2024, arguing that it did not have any measures benefitting the middle class. Their claim is contradicted by the facts. If truth be told, the Budget included a number of measures that will make a real difference in the lives of middle-class families.
How could one argue that a Budget that keeps electricity bills unchanged and maintains fuel prices stable does not affect the middle class? The Harmonised Index of Consumer Prices (HICP – a consumer price index which is compiled according to a methodology that has been harmonised across EU Member States, serving as an indicator of inflation and price stability for the European Central Bank) gives these two items a weight of around 10% of the consumption basket of the average family. This means that, out of every €100 that a middle class family spends, €10 are on fuel and energy. Now imagine if electricity prices had doubled like in the rest of Europe, or if fuel prices increased by a third: what would have happened to the middle class? Well, they would be down by around €2,000.
Who does the establishment media consider to be middle class? Aren’t some pensioners part of the middle class? How can one argue that they are not affected when the Budget increased their income by at least €780? Aren’t some parents of disabled children part of the middle class? How can one argue that they were not affected by the increase in the carer’s grant in the tax credit on therapies for disabled children?
More importantly, has no one in the independent media yet understood the additional mechanism against inflation, or the more commonly known additional adjustment to the cost of living (COLA)? If all those earning below the national median income are going to be entitled for it, how can one say that the Budget does not affect the middle class? By definition, the middle class is clustered around the national median income, with half earning above that level and half earning below. Therefore, it is fair to say that the bulk of the additional 45,000 recipients of the benefit are middle class households.
Equally, is no one in the middle class a parent? Will they not benefit from a higher children’s allowance or the raise in the in-work benefit?
The following three examples show how much the budget makes a difference to the income of typical middle class families.
1. A family composed of two working parents with two children under 16, having an income of €35,000
This couple qualify for a €100 increase in their in-work benefit, for a €500 increase in the children’s allowance, and for an additional COLA payment of €380. Out of three measures alone – the in-work benefit, the children’s allowance, and the additional mechanism – this couple will see their income go up by €980.
2. A family composed of two working parents with two children, one of whom has just started the secondary post, with an income of €40,000
This couple qualify for an increase of €100 in their in-work benefit, for an increase in children’s allowance of €250, and an additional COLA payment of around €360. They will also get €500 from the new allowance for parents with children in post-secondary education. Out of these four measures alone, this couple will see their income go up by €1,210.
3. A family composed of two working parents, one of whom part-time, with three children under 16, with an income of €43,000
This couple qualify for an increase of €150 in their in-work benefit, for an increase of €750, and an additional COLA payment of around €450. Just these three measures will improve the income of this family by €1,350.
These examples show that it is unfair to say that Budget 2024 does not benefit middle-class families. In fact, most of these families will be better off by close to €1,000 or more, which is which is a meaningful financial boost – hardly an amount to laugh at.
Photo caption: Lisa Photios