MINISTER FOR Children Barry Andrews has said child benefit for high earners should be looked at as part of this year’s budget process.
Mr Andrews gave a strong signal that fundamental changes to the benefit are on the table for discussions as part of a Government austerity programme to drastically reduce the deficit by 2014.
He said yesterday that it was very hard to justify a situation where high earners were receiving child benefit on the basis of tax paid by people on much lower incomes.
Speaking on Newstalk yesterday, he said his own view was that it was hard to justify for higher earners at a time of fiscal austerity. “Everything is on the agenda in the talks that we’ll be having in Cabinet over the next six to nine weeks.” Asked if would he not be opposed to changes in child benefit, he said it was “something that needs to be looked at”.
Asked about the issue in Cork last night, Minister for Foreign Affairs Micheál Martin said: “The problem with children’s allowances, and we’ve been through this for the past two years in terms of systems, it just hasn’t been possible to bring in a system that will tax children’s allowance.
“As far as I’m concerned we’ve had this debate for two years and both the Department of Finance and the Department of Social Welfare have gone through this and there are a lot of anomalies and you end up with people in separations and all of that because of the data bases just aren’t there.
“If they can do in the UK, we will wait and see but our systems are telling us it’s just not possible. And then there’s the issue of the child benefit being the payments for the children to the mother. Child benefit is universally available in Ireland and is paid at the same rate per child irrespective of the income of the parents.”
The benefit is paid to the parents or guardians of children under 16 years, or under 18 if the child is in full-time education, in Fás training, or has a disability.
The monthly rate increases on a sliding scale. It is €150 for one child; €300 for two children; €487 for three children; and €674 for four children; with parents of eight children receiving €1,422 each month.
Mr Andrews was responding to the announcement by the British chancellor of the exchequer, George Osborne, that he was reducing child benefit for children of high earners. He said he understood where Mr Osborne was coming from but said he was not quite sure why he was putting it off until 2013.
Minister for Social Protection Éamon Ó Cuív, whose department is responsible for the payments, would not comment on Mr Andrews’s views.
“The Government has started its budgetary process and speculation in advance of the budget would be unhelpful,” he said.
The overall cost of child benefit to the State was €2.5 billion in 2009.
The Commission on Taxation report last year identified child benefit as an area in need of reform. The commission recommended that child benefit should be a taxable income with a tax credit for low-income earners to offset the increase in their taxes.
The Children’s Rights Alliance, in its response to Mr Andrews’s comments, said reducing the benefit would have a serious negative impact at a time when families were already struggling to survive.
“Child benefit should not be up for grabs. In Ireland, unlike in the UK, most families make substantial contributions to the cost of the health, education and care of their children,” said Jillian Van Turnhout, chief executive of the alliance.