Business The Measures

Tuesday 2 September 2014

New mums down €800 as maternity benefit to be taxed

Aideen Sheehan

Published 06/12/2012 | 13:00

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NEW mothers will have to hand over €800 each to the Revenue because of the government move to tax maternity benefit for the first time.

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Finance Minister Michael Noonan sparked fury when he announced that maternity benefit would be treated as taxable income from next year.

The measure will take effect from July 1, 2013.

Around 48,000 women a year receive maternity benefit, which is a payment of between €218 and €262 a week for six months while they are off work with a new baby.

The Government estimates it will claw back €40m a year by making the payment taxable in future.

That means eligible mothers will be paying an average of €833 extra each to the taxman in the year they have a baby.

Parents' lobby group PACUB said the move to tax maternity benefit was anti-women and was part of a savage attack on children and families.

"Maternity benefit is only paid if you've been paying all your PRSI stamps, so why should they then move to tax it?

"It's as if they don't want women to have children," said spokeswoman Niamh Ui Cheallaigh.

The move would help create poverty traps by making it ever more expensive to have children, she said.

Mr Noonan said that, like other social welfare payments, maternity benefit would remain exempt from the universal social charge.

However, he said the move to tax it would correct an anomaly – by ensuring women on maternity benefit paid the same level of income tax as when they were working.

Previously, mothers only had to pay tax on any top-up payments they received from their employers while on maternity leave.

Some employers continue to pay women the full balance of their salary for some or all of the time they are on maternity leave, though many lower-paid workers do not get this top-up.

Asked if the move to tax maternity benefit was anti-women, on top of the swingeing cuts to child benefit also announced, Social Protection Minister Joan Burton said that most other social welfare payments were now taxable.

Maternity benefit is the highest weekly social benefit payment and, because of the previous tax exemption, there were cases where women on maternity leave were actually getting more income than those at work, she said.

The Government expects this change to yield them €15m in 2013 when it is introduced mid-year, and €40m over each full year.

Irish Independent Supplement

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