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Only 61pc of families to receive full child benefit payments under new proposals

The two-tier system, as recommended by the Advisory Group on Tax and Social Welfare, would contain both a universal and a selective payment.

Minister for Social Protection Joan Burton (file photo)
Minister for Social Protection Joan Burton (file photo)
Image: Sasko Lazarov/Photocallireland

A NEW REPORT on child and family income support payments has called for a two-tier system in which families would need to be means tested or below a certain income to receive the full payment.

The report, by the Advisory Group on Tax and Social Welfare, does recommend the continuance of a universal payment, however.

The chairperson of the group, Ita Mangan, said that low income families should be better targeted in order to “reduce poverty and minimise labour market disincentives or improve incentives.”

In keeping with this focus, taxation of child benefit and the implementation of a two-tier payment system were examined.

Proposals

Having agreed at the group level that taxing child benefit in isolation would not be of benefit, the main change, as proposed by the group, was related to the implementation of a “two-tier child income support payment” proposal, as follows:

  • A first-tier payment, which would maintain the universal aspect of the system, with it being made to all children.
  • An automatic supplement, which would be paid to parents in receipt of a social welfare payment. While those who receive a social assistance payment would have already undergone a means test (and get the payment automatically), those who receive social insurance payments would be required to be means tested first.
  • A means tested supplement would be made available to low to middle income families in the case where parents are not in receipt of an adult social welfare payment. This would be withdrawn as their income increases and would act as a replacement to the current Family Income Supplement.

Potential new payments

Working off the current combined child benefit and Qualified Child Increases (QCI) rate of €63 a week, the group proposed that 40 per cent of this (€25) would remain universal, with the remaining 60 per cent (€38) becoming a selective payment.

It is estimated that approximately 61 per cent of families would continue to receive this ‘selective’ payment.

This guaranteed monthly payment of €100 per child per month is down from the current payment of €130 for the first three children.

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Households with a gross income of €25,000 would also receive the full supplementary payment, to be withdrawn by 20 per cent once gross income rises above €25,000.

The various cut-off points for CIS integration payments are outlined below.

(Image: Advisory Group on Tax and Social Welfare report)

Proposed savings from the adoption of the two-tier system would be in the region of €200 million a year.

Commenting on the report, the Minister for Social Protection, Joan Burton, said that it would be used to contribute to future discussions on policy debate and proposed that the report would be considered by the Joint Oireachtas Committee on Social Protection in the future.

Read: Budget 2013: what measures kick in today >

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Paul Hyland

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