Child Benefit August 15, 2012Posted by WorldbyStorm in Economy, Social Policy, The Left.
WEALTHY PARENTS will be able to hand back the €140-a-month child benefit payment to the State if they wish, under new measures being drawn up by Government officials.
Child benefit is a universal welfare payment paid to all families with children, regardless of their financial circumstances.
What, though, is the definition of ‘wealthy’? Joan Burton, our Minister for Social Protection, hasn’t said what her definition is, but the following perhaps indicates the direction of her thoughts:
She has signalled support for a tax on child benefit for people who earn more than €100,000 a year, but said last month that it could take several years before it is introduced.
And how many families will that touch upon?
So, for example, the latest Revenue figures show there are almost 115,000 people earning more than €100,000.
[Because Revenue and Department of Social Protection use different computer systems] there is no record of how many of these people receive child benefit payments.
But what is the problem – as some see it – with child benefit? Well, currently the payments are made ‘automatically to some 600,000 families every month. They cost the State about €2bn a year’. According to the Independent there are 1.1 million children who receive it. That averages out about €1,818 per child (that’s not entirely accurate due to variations in payment rates dependent upon whether a child is first/second or third and after but it will do for now).
If we were to remove that 115,000 plus cohort of those earning more than €100k entirely, and that’s absurd – not all of them will have children of CB age, or may not have children at all, then we’d theoretically save €209m, not to be sneezed at, but not an earth shaking amount. Assume that it’s sixty per cent of that cohort – still a complete stab in the dark – and the saving would be an even less earth shaking €125m, and that’s only if the entirety of the payment is done away with. If only half of it is paid over then the saving would be €62.5m. Even accepting the caveat noted above about variations in payment, in the context of €2bn a year that’s not a whole heap.
Last month Michael Martin made the following point in relation to the issue.
Fianna Fail leader Micheal Martin said that while no one would quibble with taxing child benefit for those earning €100,000, it would not have a “very significant impact”.
“It does suggest gesture politics,” he told RTE’s ‘This Week’.
But what would have a ‘very significant impact’? What are people seriously suggesting? Abolition of the payment for all but those on welfare or very low paid work? Can’t see that one flying anytime soon. Indeed Burton’s caution as regards the stuff about wages in excess of €100k shows just how tricky this issue is when it is shaped into policy responses.
And a lesser measure? The Independent has the following:
A repeat of the 10pc child benefit cut he introduced would bring the payment down by a further €14 to €124 and reduce the annual bill by €190m.
During last year’s general election campaign, Fine Gael budgeted for a cut in child benefit in its policies. But a direct cut would be politically difficult for Ms Burton and her Labour Party, which promised voters that it would prevent Fine Gael from doing this.
€190 million is – obviously – a greater chunk removed from the bill, but it’s still minimal enough (which isn’t to say that I’m ignoring the impacts, what I’m trying to do is work through what is going on here).
But I wonder is Martin letting the cat out of the bag, at least as regards ultimate proposals further down the line, ie the tapering off of CB as an universal payment for as the IT notes here are other proposals for rolling CB into other payments such as FIS.
The Department of Social Protection has prepared a detailed technical report on an “integrated” welfare payment, which would combine the family income supplement and child dependant allowance.
This follows a value-for-money review of child benefit, which highlighted the need to “rationalise” the current system of child income support payments and provide “more consistent” assistance to low-income families.
‘Rationalise’ is an expedient little word, isn’t it?
But from a position of one strongly in favour of universal benefits it seems to me that this may be an example of the limits of what is politically possible in an advanced capitalist society in terms of removal of social provisions. It’s not quite a third rail of Irish politics, but it’s close enough. And whatever happens it will if implemented be very interesting to see figures on how many people send back the payment.