Tax And Children


Sir - Donal Lawlor (March 8th) wonders whether I attribute in any way the post-1980 decline in the birth rate to the reduction in the child allowance in the income tax code in the January 1982 Budget proposals introduced by my government and implemented in the later March budget of Fianna Fail. No, I don't think anything of the kind.

First of all, the decline in the birth rate had already begun a full year earlier and was well advanced before this budget was introduced. And, second, the part-replacement of the regressive child tax allowance by increases of between 34 and 87 per cent in children's allowances (since renamed child benefit), and by an increase of about 40 per cent in the dependant child allowance in the Social Welfare Code, in fact represented one of the biggest financial boosts ever given in respect of children - and it was introduced at a time of extreme financial and economic difficulty.

In the case of a family with three children, the net effect of these changes was to increase by 23 per cent the child-related income of an industrial worker on the average industrial wage, while in the case of an unemployed person with the same number of children the child-related income was increased by 25 per cent - or over £600 a year in to-day's money terms. Even the wealthiest parent gained slightly from these changes - which were, however, designed to overcome the obvious inequity of child-related transfers through the tax system. Such tax allowances offer no benefit whatever to parents too poor to pay tax, and benefit high income taxpayers twice as much as they benefit low income tax-payers - Yours, etc.,

Garret Fitzgerald, Rathmines, Dublin 6.