Child Benefit August 15, 2012
Posted by WorldbyStorm in Economy, Social Policy, The Left.trackback
Reading the article yesterday in the Irish Times that notes that:
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.
But:
[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.
Burton’s proposal has to be perhaps the most confused political measure mooted here in years. And that’s some achievement given what we’ve had to endure from ‘responsible’ mainstream politicians.
We have a tax system with more holes than a warehouse full of Swiss cheese precisely to give the wealthy a range of options a let them select just how much tax they wish to pay. We have howls of outrage any time increases in income tax are proposed, or increases in wealth tax, all of said howls predicated on dubious arguments about driving away the talented go-getters we’ll need if we’re to get out of this mess (that many of them are the same useless f**ks who got us into it in the first place nevers seem to feature).
And now we have a measure where we’re going to introduce a measure where we expect the same people to hand back money to State voluntarily who usually, in many cases, go to extraordinary lenghts to ensure they don’t have to hand over a single cent more than they have to to the State. The mind boggles.
Labour could, quitely and unobtrusively, insists on eradication of many of the loopholes which allow wealthy individuals to avoid tax in the first instance, rather than dragging child benefit into the equation where it’s clear, third rail or no, the big objective for the orthodoxy is to de-legitimise universal benefts (they’re well on their way with that one) as a prelude to replacing universal benefits with means tested and/or private insurance type regimes.
You can easily imagine Michael O’Leary posing with an oversized cheque as he ostentatiously forgoes his child benefit, while threatening/ promising to leave the country if the democratically elected government increases his income tax.
That’s true of the rich everywhere: it’s not so much that they won’t pay tax, but that they want to choose what they pay and what’s bought with it. Deaglan de Breadun’s book about Chuck Feeney is explicit on that point – many Irish causes benefited from Feeney’s almost pathological aversion to paying income tax in the US.
One of the excuses Denis O’Brien reportedly gave for seeking tax exile is that he didn’t trust the government to spend his taxes wisely.
The rich won’t change their attitude to tax this side of a socialist revolution and I personally think that for high earners citizenship should be tied to taxation status.
That’s a very interesting point about cuddly Chuck and how his generosity here was at the expense of others, probably more deserving in the states.
On the subject of Chuck it’s nice to see that critical thought is alive and well in our universities who are going collectively abase themselves before an individual who, in any cogent moral community would be a pariah: http://dcu.ie/news/2012/aug/s0812f.shtml
If every tax dodging billionaire in the state had coughed up there’d be no need for Feeney’s shoddy ‘philanthropy’.
On the other hand the Independent reported today
It had that ‘too good (or too bad) to be true’ aspect to it. But I suppose it’s mission accomplished as it has pushed the whole issue of child benefit up the media agenda and positioned it nicely in the run in to the December budget.
Co-incidentally, I filled in a form CB-56 (http://www.welfare.ie/EN/Forms/Documents/cb56.pdf) just two weeks ago in order to renounce child benefit, admittedly because I have left the State. On that form, as noted you have no option to renounce the benefit without cause (although administratively this could clearly be easily added). You do however have the option to designate any account payee – so affluent refuseniks can just opt to send the cash direct to a charity.
Or the refusnik could designate the account payee to be the Collector General.