Willie O'Dea
Question:448. Deputy Willie O'Dea asked the Minister for Social Protection her plans for the future of child benefit; if she intends to tax or means test same; and if she will make a statement on the matter. [5727/13]
View answerTuesday, 5 February 2013
Questions (448, 496)
Nicky McFadden
Question:496. Deputy Nicky McFadden asked the Minister for Social Protection if she is in a position to provide an update on possible reform of the child benefit system; and if she will make a statement on the matter. [5809/13]
View answerWritten answers
I propose to take Questions Nos. 448 and 496 together.
Child benefit is a universal payment that assists parents with the cost of raising children and it contributes towards alleviating child poverty. The estimated expenditure on child benefit in 2013 is around €1.9 billion and it is currently paid to around 609,000 families in respect of some 1.16 million children.
The Government is conscious that child benefit, as a universal payment, can be an important source of income for all families, especially during a time of recession and high unemployment. The social protection system also provides assistance to low income families with children through the payment of qualified child increases on primary social welfare payments and through the family income supplement payment. Both of these provide a level of assistance which is directly or indirectly linked with a household’s income situation.
Issues relating to changes in taxation policy are primarily a matter for my colleague, the Minister for Finance. However I can confirm that the Government has not announced any plans to implement means-testing or taxing child benefit at this time. Neither taxing child benefit nor means testing the payment are simple solutions as there is a range of policy, legal and operational issues that would have to be addressed if a decision was made to proceed along the lines of either approach. In terms of means testing there would be a need to ensure that systems are in place to ensure that households only claimed benefits to which they were entitled, as the scale of means testing approximately 600,000 families would be significantly greater than anything required by the current social protection system in terms of means tested payment. In terms of taxing the payment there are questions relating to the ownership of the benefit and the effects of taxing the payments in the context of the treatment of married and co-habiting couples. Both approaches would also require major development work to enhance Department of Social Protection and Revenue systems.
On a more general level, achieving a better design of the overall system of child income supports, including child benefit, raises complex issues about the effectiveness and efficiency of the full range of income supports currently provided to families and their children. In this context and in line with a commitment in the Programme for Government, I established in 2011 an Advisory Group on Tax and Social Welfare, which has been tasked with recommending cost-effective solutions as to how employment disincentives can be improved and better poverty outcomes achieved, particularly child poverty outcomes. The Advisory Group prioritised the area of family and child income supports and has completed its work on this area. Their report is currently receiving my consideration and will be published in the near future. Given that the issues involved in this area are quite complex further consideration will be required as to how reform in this area might be progressed.