Burton rules out taxing or means-testing child benefit

Taxing or means-testing child benefit in the budget appear to have been ruled out by Minister for Social Protection Joan Burton.

She said she personally favoured a tax, but the systems were not adequate to introduce it.

Ms Burton added that a “system of very detailed means-testing would be very, very difficult for most middle-income families’’.

Asked on the RTÉ Radio programme This Week today about payments to the elderly, she said she was aware that people enormously valued free travel. There was a problem with people holding fraudulent passes, she added.

Ms Burton said the Government had to ensure that changes made in the budget were progressive and that people with the most contributed proportionately. Fine Gael and Labour brought different viewpoints to the table, but that was what representative government was about.

She said that everybody around the Cabinet table had to be aware that a single, unemployed person, relying solely on social welfare, received €188 a week and that was quite a tight amount of money to live on.

Among other expected changes in Wednesday’s budget are that mortgage holders will be allowed to defer payment of the new property tax under a means test if their monthly loan repayments are high enough.

The new tax to be unveiled in the budget will be levied at a rate of 0.2 per cent of current market value, but the Cabinet has agreed to permit deferrals for homeowners with low incomes and high mortgages.

Single people on an annual income of €20,000 and couples on €30,000 are expected to qualify. Payment can be put off until the property is sold or low-paid homeowners’ personal circumstances improve.

For those in difficulty with mortgage repayments, deferments may be possible if gross income is less than €15,000 for single people and €25,000 for couples after 80 per cent of the annual mortgage interest bill is paid.

There will be no blanket deferment for those in negative equity, however.

In an effort to boost job creation, Minister for Finance Michael Noonan is planning to cut the VAT rate for the construction industry from 13.5 per cent to 9 per cent.

Savings of €800 million will have to be made in health and €540 million in social protection. Tax increases will yield a further €1.25 billion to bring the overall savings up to the €3.5 billion target.

Other elements of the budget package are: a €10 cut in child benefit from €140 to €130 a month; a reduction in income tax exemption limits for the over-65s of €18,000 for a single person and €32,000 for a married couple; and a reduction from 12 months to nine in the period for payment of non-means-tested jobseeker’s allowance.