A PLANNED new welfare payment for poorer families could be financed by taxing child benefit for higher income parents, a report being examined by the Government has suggested.
A research paper by a senior official in the National Economic and Social Council (NESC) says child benefit, which costs more than €2 billion a year, is "hugely inefficient" at tackling poverty because it is paid universally to all families regardless of their income.
It says that instead of channelling more resources through the child benefit system, a new "second-tier" support should be provided to families on low incomes.
This could be set at a similar value to the child benefit payment, which is currently worth €166 per child per month, and would replace payments such as the child dependent allowance and the family income supplement.
However, it estimates that it could cost up to €775 million to implement. The report says savings are possible by taxing child benefit, rescinding the higher rate of child benefit for third and subsequent children and lowering overall spending on adult social welfare.
The Government, which is studying the report's findings, has pledged to provide a second-tier support for poorer families in the Programme for Government. The report Ireland's Child Income Supports: The Case for a New Form of Targeting is by John Sweeney, a senior social policy analyst at the NESC.
However, well-placed sources say the council - which includes representatives of key government departments, trade unions, employers and independent experts - was unable to reach an agreed position on the proposed support.
Some members argued that it could have negative effects on splitting up families in order to qualify for the payments, while others argued that the cost of such a scheme was not sustainable, according to council sources.
The research paper itself suggests that the second-tier support could come in the form of a direct payment or a tax credit, depending on whether a family is working or not.
In order to prevent the payment becoming a "poverty trap", the payment would be tapered as a family's income rises. Unlike some benefits for children, it would be paid to both families on welfare and those in low-income employment.
Where two parents do not agree on who should receive the new credit, it could simply be halved between them, the report suggests.
Any proposal to tax child benefit would be highly contentious. The research paper notes that it was likely to be challenged in the courts.
