Politics

Wednesday 23 July 2014

Cut child benefit for rich, Government told

Two out of three say payments should be means tested

Fionnan Sheahan Group Political Editor

Published 09/06/2014|02:30

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Just 28pc of people polled believe the current system whereby child benefit is paid for all children should be maintained.
Just 28pc of people polled believe the current system whereby child benefit is paid for all children should be maintained.

THE Government would have the backing of almost two thirds of the electorate if it decided to means test child benefit, a new poll suggests.

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Two out of three believe that the current universal system of child benefit being paid to everyone, regardless of how wealthy they are, should be ended.

The stark finding in the Irish Independent-Millward Brown poll will put pressure on the Government to re-examine the issue.

Successive governments have shied away from the controversial move citing administrative obstacles to such a huge undertaking.

Just 28pc of people polled believe the current system whereby child benefit is paid for all children should be maintained.

Social Protection Minister Joan Burton has ignored a report recommending the introduction of a two-tier child benefit system through means-testing or taxation.

The poll also found that spending cuts rather than tax hikes are the preferred option to achieve savings in October's Budget.

Reflecting weariness at the continual tax rises, nearly two in five people feel reducing spending should be the sole option used by the Government to cut the deficit in Budget 2015.

Only one in 10 believes further increases in tax are the way to make the adjustment. But more than half feel a €2bn package of cuts and taxes is unnecessary next year – though a sizeable minority still believe the full adjustment is required.

Finance Minister Michael Noonan has indicated a €2bn package may not be needed to reduce the deficit.

Means testing of child benefit is particularly strongly supported by people on low incomes, 71pc, who clearly feel they would not lose out if income limits were set for qualifying for the benefit. Labour Party voters, 67pc are also strongly in favour of the move.

And both Labour leadership contenders, Joan Burton and Alex White, have indicated they will demand less austerity in next year's Budget.

The Labour Party leadership contender was also warned against a straight cut to child benefit because of its impact on low-income families – yet still went ahead with a €10-a-month across-the-board cut in the Budget.

The expert group on child benefit report, which Ms Burton sat on for a year, specifically recommended not to reduce child benefit with no other change.

Despite the Labour Party promise to protect child benefit, the payment was reduced by €10 – from €140 a month per child to €130 – in Budget 2013.

Before the cut was made, the option of taxing or means testing the payment was put on the table for the first time after an expert report recommended it as one of the "most feasible options for change".

The move towards a two-tier payment would have resulted in those over the threshold losing up to €53 of the €130 monthly payment per child.

The Mangan Report said child benefit should remain a universal payment and left the Government with two options – taxation of the benefit or a two-tier payment with a top-up for families on low incomes through means testing.

The two-tier model would have meant everyone getting a basic payment, probably lower than the current rate, with the families most in need getting a top-up.

Payment

The recommendations of the Advisory Group on Tax and Social Welfare, chaired by Ita Mangan, said there was "no one perfect method" of targeting child income support payments but the group concluded the "preferable method" was the two-tier payment.

Up to 400,000 parents of nearly 700,000 children would have been hit by the change.

But Ms Burton shelved the report for over a year and didn't publish it until after the €10 cut to everybody was made.

Means testing or taxation of child benefit would be cumbersome and possibly take up to 18 months to implement, but it would be possible, especially with the greater co-ordination of information between government agencies.

Following the €10 cut, the Coalition has signaled there won't be further changes, meaning any reforms will be parked indefinitely.

The pressure to reduce the social welfare budget has been eased as the fall in unemployment levels will largely make up the level of adjustment required there through lower dole payments. On the wider question of where the adjustment should come from in Budget 2015, 37pc say it should be achieved through reduced spending, 10pc say increases in taxation and 32pc say a mixture of the two elements.

Fine Gael and Fianna Fail supporters are most in favour of the concentration being on reductions in spending.

However, a clear majority of 56pc say there's no need to have the €2bn adjustment, with Sinn Fein, Independent and Labour supporters strongly of this view.

But there's still 28pc of people who think the Government will have to stick to the €2bn adjustment, with Fine Gael supporters most supportive of this view.

Irish Independent

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