Minister worried by numbers on disability

INTERVIEW:Burton against any proposals for taxation of child benefit

Minister for Social Protection Joan Burton has raised concerns about the high numbers of Irish people on disability and other benefits compared to in other countries.

In an interview with The Irish Times she said research produced by her department, showed 16 per cent of working-age adults were getting some form of disability, illness or sickness payment. She said this was very high compared to other countries in the OECD.

Signalling this would be addressed, she pointed to the Netherlands, which she said was once the “sick man of Europe”. She said her department was focusing on getting as many people as possible in this category back to work.

She has also indicated a preference for retaining universal payment of child benefit rather than taxing it.

Further reductions in child benefit are likely in next year’s budget following the cuts announced earlier this month, which caused difficulties for many of Ms Burton’s colleagues in the Labour Party and led to party chairman Colm Keaveny voting against the Government.

However, the approach for next year will be guided by a report by the Tax and Social Welfare Advisory Group chaired by Ita Mangan, which will be published in the new year.

The group’s two main recommendations are understood to be: a significant lowering of the universal payment to €100 with ongoing compensatory payments available for low-income families; or alternatively for child benefit to be taxed at the level which people pay on their income tax, which is 41 per cent for higher earners.

Ms Burton said that grappling with the issue of child benefit would involve some very difficult decisions.

Universal payments

Outlining her own views she said she agreed with universal payments in principle and pointed out that taxing child benefit would result in cuts to payments way in excess of those already made. Benefit was cut by €10 per month for the first two children, and €18 a month for the third child in the budget, yielding a saving of €140 million.

Excercising either choice of reducing the benefit to €100 or taxing at full rates would be extraordinarily risky and controversial politically, even though the savings to the exchequer would be enormous: close to €500 million per annum.

Ms Burton pointed to recent changes announced by British chancellor of the exchequer George Osborne where families earning over £60,000 (€73,500) can opt to relinquish child benefit or pay full marginal tax on it if they choose to retain it.

“That debate and those policy changes have made people in Ireland appreciate it’s a complex debate where there are difficult decisions and hard choices to be made.”

She said the Mangan report would be published at the end of January and that all parties should study it and then state where they stand on child benefit. Accusing Opposition parties of kicking to touch and speaking in generalities, she said: “If we are really going to have a debate, we need people to come off the fence, look at facts and figures in the Mangan report and look where balance lies.”

Ms Burton said a flat taxation at marginal rates would be far in excess of any reduction made to date, suggesting if it is taxed it will be at lower rates than income tax.