According to today’s Irish Times, proposals to tax or means-test child benefit payments in the next budget appear increasingly unlikely due to major legal and administrative problems.
The Government last year cut the monthly child benefit by €16, but left the door open to taxing or reducing the benefit for higher income families at a later date.
Internal Department of Finance records show the extent of the obstacles facing policymakers trying to grapple with the issue.
Officials say there are significant problems in, for example, seeking to tax cohabiting couples with children. While the Revenue Commissioners have a database of married couples to use for assessing tax, it has no such data on cohabiting couples.
“There is no way of accurately getting this information so as to ensure all cohabiting couples pay tax on their child benefit,” records state.
Similarly, in the case of divorce or separation, officials state it would be difficult to determine who would be liable to pay tax on child benefit.
If tax on child benefit was not applied equally, officials warn that there could be constitutional difficulties if married people were treated worse than cohabiting couples.
Even if an equitable way to tax child benefit was identified, department officials say it would be problematic to ensure people would be treated fairly. If the benefit was taxed, it would likely be based on a person’s income for the previous year. Such a system would not take account of current-year income.
“If a person was unemployed in the year after assessment it may not be fair to reduce their child benefit,” according to department records.
The Government would face a similar set of administrative and policy difficulties if it opted to means-test child benefit instead of taxing it, according to officials.
The dilemma of whether to measure net or gross income is one obstacle raised. While gross income is simpler and more transparent, officials say net income would provide “a more accurate indicator how well-off a household is in practice”.
Any system of means-testing would need to be responsive to changes in circumstances, such as reductions in income, unemployment, or changes in the household arising from separation or divorce.
In addition, an audit and control system would need to be put in place. This would have to limit the possibility of under-declaration of income and prevent fraud.
Another obstacle with means-testing is the cost of administrative and information technology. Such a system would involve significant costs and require “significant changes to IT systems . . . to deal with the processing of changes in income and possible under or overpayment of child benefit”.
Documents also note the dilemma of who to means-test and the lack of data for the overall household income for cohabiting couples. “The concept of the taxable unit is different to the concept of the household used in the social welfare system,” documents state.
Source: Irish Times
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i cant believe that the goverment are going to take more from us,I have 4 children and live on my own I am back to work in a few weeks time from my maternity leave,the way things are going i would probably be better off unemployed,I love my job as a pre school teacher this country has gone downhill, I think the goverment should reduce their wage packets and leave what we have alone,I feel their are really putting us all in difficult financual circumstances which is a joke as if we havent enough pressures in our lives.
Valuable and fantastic stuff you have here. Keep on! I’m always looking to read on that issue.
hi all can,t believe this goverment..the bale out banks by tax payers money and its still not enough to keep them afloat so the hit on the most vunerable.. Since their making a couple of hundered thousand a yr not including their expences its easy for them to hike up the taxes on the poorer people.. do ya blame people wanting to get outta this country.. its the pits..
instead of cutting child benefit why not cut there wages!!! Why hit the people who struggle to survive thanks to this government
hi i just had triplets 5 and half wks ago i need every penny i can get my hands on i also have 1 other child so it will be hard this government is a joke out with them keep bailing the fat cats out of thats all there able to do.
i think very high earners should be means tested.i mean why can the high paid politicians get itthe only people being hit is the social welfare
I am so disillusioned with this country…it just gets worse and worse. we need to revolt against the law makers at this stage, its just not on anymore..such a depression!!
why cant the government take a bigger paycut and leave the childrens allowance alone. its ok for them with their big salary,houses,cars and 3mths of for their holidays. i use the allowance on bills if needed but mostly i do use it for clothes,shoes etc for my son. it is an absolute joke-once again preying on easy targets.
they say they will protect the vulnerable-has anybody seen this protection? oh my bad i forgot the cut in my sons allowance was protection money. give us a break and leave us alone.
another F*** up by the Irish Government.
I think the article is pointing out all of the flaws in the argument but is still letting us be aware of the fact that the government is trying to tax childrens allowance.
Thats so ridiculous.
Taxing Tax money?
as one poster has mentioned the Irish government is a bloody joke and as Sarah has said they are hitting on easy targets. Why dont all of the big wigs who are insisting on on taxing the most in need feel around in their big fat wallets and put their own money into the system. I read soemthing about one woman in government claiming “expenses” gor her husbands pay per view porn habit, and while us mothers are hard working struggling to find childcare and spend time with our children while working and paying bills get taxed out the backside. This is ridiculous.
why is it that irish goverment does not encourage those who leave their home and family every morning to work and pay tax to the goverment. they collect so much tax from tax payers deny them of all benefit exccept child benefit which they are about to take away.the aged and children which cannot contribute to the country financially are being reeped of their benefits. while the able bodied men that can work and pay tax are been given all soughts of benefits to stay at home in the name unemployed. if this continues then the goverment should be rest assured that more able bodied men will stay at home claim no employment and recieve all the benefit the government dish out to them. irish government creat more jobs so that lesser people will depend on welfare and there will be more money for the govt to sought out debts
hi i just read this mail am i reading it different to the above people is this report sayin our child benefit cannot be touched again?
o my god not again ,what can i say about the irish government there a big joke !!!!!!!
Surely they can not cut this again!! My daughter needs a special formula that can only be bought in pharmacies and is 125 per month!! very little left to cover everything else, Docs fees, repeat prescriptions etc, if my husband was not working this would all be free! This government seems to be hitting the people that need it the most, we are baring keeping our heads above water as it is, and now more talk of interest rate hikes too
i think the goverment are always hitting on easy targets such as child benefit, child care,health,old age,people who are already struggling and depend on these payments for lots of things.
I am confused does this mean that an across the board cut will be applied to everyone in receipt of child benefit?Can they really cut it again given that so many people rely on it for bills and clothing?