Mortgage holders vulnerable, says Burton

Minister for Social Protection Joan Burton has expressed concern about the impact of a child benefit cut on parents with big mortgages and high outgoings.

Her comments followed the publication of an expert group report recommending the introduction of a two-tier child benefit system under which families would only qualify for the maximum payment if they earned less than €25,000.

“One of the big issues for me would be the fact that we’ve a lot of families with parents in the 35-58 age group who bought property . . . at the height of the boom,” Ms Burton said.

“They have high mortgages and high outgoings. They may have quite high income but the child benefit in cash is important to them.”

‘Fantastic job’

However, Ms Burton told RTÉ the advisory group on tax and social welfare chaired by Ita Mangan had done a “fantastic job”. The report suggested a child benefit payment replacing the Qualified Child Increases (QCI) and Family Income Supplements (FIS).

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

For every €1 over €25,000 earned by a household, 20 cent would be withdrawn from the “top-up” payment.

Ms Mangan said better-off people would lose and some lower-income families would gain under the proposed system. She acknowledged that some families in receipt of FIS would face a reduction.

Ms Mangan said the group recognised something had to be done for FIS recipients and said the group was looking at a proposal involving working-age payments to “ensure better poverty outcomes”.

That matter will be the subject of another report. She gave a technical briefing on the report to journalists and advocacy groups yesterday. “There is no point in suggesting there won’t be major losses for some people in this change. There will. Better-off people will lose. Some lower-income families will gain . . . Some lower income families will also lose,” Ms Mangan said.

Online top-up

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

Ms Mangan stressed it was up to Government to decide whether or not to implement the report. She said the report would not be implemented “in one go” and estimated it would take 18 months to put the proposal in place.

The payment would continue to go to the mother, she said. Asked about a previously suggested proposal to tax child benefit for families earning more than €100,000, Ms Mangan said that would yield a very low figure. She said 20 per cent of children were living in “taxation units” earning €80,000 and the figures for those earning €100,000 were not available.

Under the proposal, 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.

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

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.