Dáil Éireann díospóireacht -
Tuesday, 19 Feb 1991

Vol. 405 No. 3

Written Answers. - Child Rearing Costs.

Richard Bruton

Ceist:

33 Mr. R. Bruton asked the Minister for Finance the estimate he has of the average cost of rearing a child; the estimated current 1991 value of child tax free allowances if these had been increased in line with the cost of living since the early seventies; and if he will make a statement on the matter.

Minister for Finance (Mr. A. Reynolds)

Statistics on the average cost of rearing a child are not collected. I am not sure that even if they were, they would serve a useful purpose for policymaking. Average data would, for instance, mask the differences in expenditure on children by the very well-off and by the less fortunate in the community. There are also differences in the cost of providing for children of different ages and in cost per child, notably in small families against large ones.

In 1971-72 the general child tax allowance stood at £150 for children aged over 11 years and at £135 for children not over 11 years. These allowances would be £1,045 and £940 respectively in 1991-92 if they had been increased in line with the consumer price index over the intervening period. The cost of reintroducing the allowances at this level would be up to £260 million.

The Deputy will recall that the child tax allowance, which then stood at £100, was abolished with effect from 6 April 1986, and that the revenue from its abolition was used, along with other moneys, to fund the introduction of child benefit at a rate sufficient to compensate standard rate taxpayers, then paying tax at 35 per cent, for its loss.

I would also point out that in 1989 I introduced a child addition of £200 per child in conjunction with the income tax exemption limits, and increased it to £300 in 1990. In the 1991 budget I increased it to £500 for third and subsequent children. The purpose of the addition is to benefit low-paid taxpayers with family responsibilities.

In addition, substantial improvements have been made in income tax in recent years. Including the changes I announced in this year's budget, the top rate of tax has been reduced from 58 per cent to 52 per cent and the standard rate from 35 per cent to 29 per cent, and the standard band extended by £4,000 for a married couple. There have also been increases in the personal and PAYE allowances. These changes are of benefit to taxpayers generally, including those with children.

Finally, there is considerable expenditure on children other than through the income tax system. For example, child benefit payments will amount to over £210 million in 1991, while estimated gross expenditure on education will amount to £1,400 million.