independent

Saturday 19 April 2014

Reprieve for families as child benefit cuts shelved

Social Protection Minister Joan Burton

FAMILIES will get a reprieve from child benefit cuts, planned as part of a radical overhaul, for at least two years.

And the politically unpopular recommendations of an expert report will possibly be long-fingered beyond the next general election.

The report's recommendations would cost middle-income families at least €22 and possibly €53 a month.

Social Protection Minister Joan Burton is indicating a preference for a top-up child benefit payment system, kicking any reform of the system well down the road.

Following the controversial €10 cut in child benefit, the extreme delay of almost a year in publishing a report is seen as a sign that Ms Burton has no appetite to tackle the issue.

"I don't think it's any coincidence this didn't see the light of day for 11 months," said a Coalition source.

"By the time of the next Budget, it will be well buried. After last year, she has no intention of revisiting child benefit any time soon."

A two-tier child benefit payment, with extra money for low income families, would take at least 18 months to implement – far longer than taxing child benefit.

But the report says the two-tier model would be "preferable".

The delay would mean the change would not be implemented until the year before the general election.

Despite up until now talking about taxing child benefit for high earners, Ms Burton (inset) is set to snub a recommendation that taxation would be "feasible".

But the report also says there would be legal difficulties to overcome, which would need either a referendum or an overhaul of the tax system to ensure married couples were not discriminated against.

Government sources say this obstacle will be used to end the taxation argument, and the two-tier system would take years to implement, with no decision in sight.

"This report will kill off discussion on taxation," said a senior government source. "Administratively and technically it can be done. In terms of social policy, it is not the right way to do it.

"Once you go with taxation, the only way you can touch it is through the tax rates."

The difficulties with taxing mean Finance Minister Michael Noonan will "wash his hands" of the reform, leaving it up to Ms Burton to resolve.

"Politically, it is going to leave this for Joan to solve. She's delayed because she's enjoyed talking about taxing child benefit for so long," the source said.

Aside from the potential backlash from middle-income earners if the rates are cut, children's charities are also expressing concerns about proposals for reform to child benefit.

The expert group insists the figures set out in the report, where the basic payment would begin to be cut off once a family's income went above €25,000, is an example – it would be up to the Government to set the rates.

The report suggested a €108-a-month basic payment for everyone and a €165 top-up for low income families.

If the tax model was adopted, the monthly child benefit payment would drop from €130 to €104 for those taxed at the lower rate of 20pc and from €130 to €77 for those taxed at the higher rate of 41pc.

But the Society of St Vincent de Paul said the options proposed would "worsen the situation for struggling families".

Poverty

Barnardo's also said it would be "deeply concerning" if the Government's only intention was to save money rather than reforming the system to assist those on low incomes.

Pressing Taoiseach Enda Kenny on the report, Independent TD John Halligan said any cut would drive more families into poverty.

The expert group's chairperson, Ita Mangan, said there were problems with the taxation model, although it was still feasible.

Ms Burton said last night she was referring the report to an Oireachtas committee, and it would require further analysis.

"You don't have to do this in one year, you can do it over a period of time," she said.

Irish Independent

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