Child benefit cuts proposed by expert group

Families will only qualify for the maximum child benefit payment if they earn less than €25,000 under a two-tier system set out in an expert group’s report to be published today.

A reduced standard rate of about €110 a month would be paid for each child, down €20 from the current €130. The largest possible weekly “top-up” is €38, but the supplement would be cut as income increases beyond €25,000.

Parents would have to apply for the “top-up” online where they would be required to make a full declaration of household income.

Families with one child would lose their portion of the “top-up” and receive only the basic rate once income hit €34,935; those with two children when income reached €44,870, and those with three children when income was €54,805.

€200m savings

Savings of €200 million could be achieved if this method of targeting child income supports is adopted, the advisory group on tax and social welfare’s report claims.

Minister for Social Protection Joan Burton commissioned the report, which she brought to Cabinet yesterday.

The report examined six reform options and concluded the two-tier system and the taxation of child benefit were the two most feasible, with the former described as the “preferable” method. “Some members of the group consider that taxation of child benefit remains an attractive option,” the report states.

The Government does not have to adopt the report’s favoured option or agree to set the threshold at €25,000.

A full payment would replace the current Qualified Child Increases (QCI) to social welfare recipients and Family Income Supplements (FIS) for those with low earnings, “and potentially the back to school clothing and footwear allowance also”. However, the upper age limit for child benefit would remain 18 years while the current upper age limit for QCIs and FIS is 22 years.

Child benefit would remain a universal welfare payment made to all families with children, regardless of income.

Before last December’s budget, the monthly payment was €140 for each of the first two children, €148 for the third child and €160 for each subsequent child. The rate was cut to €130 for the first two children and by €18 a month for the third child in the budget, yielding a saving of €140 million.