Friday 25 May 2018

Three-child families hit with €40 benefit cut

Car scrappage scheme to be extended but fuel prices rise

Fionnan Sheahan and Maeve Dineen

FAMILIES with three children will have their child benefit cut by €40 a month after tomorrow's Budget.

They will also have to pay €15 to €20 a month more for medicines before they can claim a refund.

High earners also face a double hit on their tax bill, with the employee PRSI ceiling abolished and income-related tax reliefs, mainly property-based, to be scrapped.

However, in one of the few rays of light in a draconian Budget, drivers who trade in old bangers against new 'green' cars will enjoy a continuation of the scrappage scheme.

But petrol and diesel prices are expected to rise.

The Government will also seek to create thousands of jobs in the construction industry through fitting houses with water meters and making older houses more energy-efficient.

Child-benefit rates for the first and second child will be cut by €10, with a larger reduction of €20 for the third child.

The reduction will revert to a €10 cut for subsequent children, as child poverty is more likely in large families.

Finance Minister Brian Lenihan is today putting the finishing touches on a €6bn package of cuts and taxes.

Despite the fact that the Cabinet held its last meeting on the contents of the Budget before the weekend, it is understood there are still details being thrashed out.

The surprise development means aspects of the Budget are still up for debate between Mr Lenihan and a number of ministers.

And the special attention being afforded to Independent TDs Michael Lowry and Jackie Healy-Rae to secure their votes is causing tensions among Fianna Fail backbenchers.

The pay of ministers and TDs will be cut and a cap will be placed on future salaries of semi-state bosses.

Cabinet ministers will have their pay cut by up to €20,000, but existing contracts make it difficult to reduce packages of senior public sector executives.


Future appointments to the public sector and semi-state bodies will see their pay capped at between €200,000 and €250,000.

New judges will have their pay cut by 10pc, in keeping with the cut of 10pc for new entrants to the civil service.

A review of the airport tax will be announced, which is expected to see it either reduced substantially or abolished.

The depleted state pension fund will be raided to pay for the installation of water meters in homes across the country.

The Government will take €550m from the National Pension Reserve Fund (NPRF) next year to pay for the meters to be installed in houses -- just weeks after two-thirds of the pension pot was taken to put into the banks.

Household water charges are to be introduced once meters are installed in the 1.2 million houses across the country.

As part of the IMF-EU bailout, the €24bn NPRF is already losing €17bn to be injected as capital into the banks. There is provision for the pension fund to invest in infrastructure projects, but the fund management in the National Treasury Management Agency has shied away from it so far.

The installation of water meters is expected to take three years, with water charges being introduced from 2014 onwards.

The NPRF will get a return for its investment when water charges are introduced.

The Government is rejecting the offer from energy company Siemens to lend the State the money needed to install the 1.2 million domestic water meters.

Taoiseach Brian Cowen's ministers and officials remain confident the Coalition will have the votes to get the Budget passed.

Independents Mr Lowry and Mr Healy-Rae, who hold the balance of power, will today receive further responses on their demands for backing the Budget.

Fine Gael will discipline any TD who votes against party orders on the Budget.

The party's youngest TD, Lucinda Creighton, is threatening to abstain if the Budget looks like being defeated.

But senior party sources say any TD who does not vote in line with the party hierarchy will lose the party whip automatically.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business