Two-tier child benefit system recommended

An expert group on taxation and social welfare has recommended the introduction of a two-tier child benefit system.

The Mangan Report said there should be a universal child benefit payment for all, with a top-up payment for those who need it most.

The group calculated that 61% of families would qualify for this second-tier payment, which would be made on a sliding scale.

It has ruled out taxing child benefit, saying it would result in worse outcomes for poorer families.

However, it pointed out that despite previous claims, it is possible to tax child benefit because the revenue and social protection computer systems could now "talk to each other".

Group chairperson Ita Mangan said some poorer families would gain under the two-tier system, while there would be "major losses" for some better off people.

Taoiseach Enda Kenny said universal child benefit payments will continue and no changes will be made to the payments without full discussion.

He told the Dáil that the universal nature of the payment was "fundamental".

Speaking during Leaders' Questions, Mr Kenny said discussion would now focus on the report's recommendations of either a two-tier payment or taxation of the benefit.

He said there was quite a lot of time before any decision would be implemented.

Group looked at current benefits

The advisory group on tax and social welfare was tasked with looking at how child benefits and family income supplements were paid and assessing how to deliver greater benefits to poorer families.

It suggested a sample model whereby households earning under €25,000 a year would get full benefits - the universal payment plus the full top-up amount.

It recommends that households on between €25,000 and €35,000 would get the extra payment, but on a sliding scale. Those with household incomes above €35,000 would just get the basic universal payment.

It is proposed to apply the sliding scale reduction at a rate of 20%.

In simple terms, this would mean that for every €1 over €25,000 that a family earned, they would lose 20 cent from the second tier payment.

This reduction would be subject to some criteria, such as number of children in the family.

Fianna Fáil critical of recommendations

However, Fianna Fáil has described the proposed two-tier system as "horrendously complicated" and "quite unacceptable".

Willie O'Dea said the report seemed to be contradictory, as it supports universal benefit on the basis that all children should be valued, but then seemed to value some children less.

Mr O'Dea claimed it would take an extra 500 public servants to implement the scheme.

He urged the Government to raise the €200m involved by adopting Fianna Fáil's proposed higher USC rate for those earning over €100,000.

Mr O'Dea also criticised the minister for the delay in publishing the report, which is dated March 2012. He said her attitude showed "contempt" for parliament.

Minister for Social Protection Joan Burton welcomed the report and the recommendation that the "universal nature of child benefit be maintained".

She said her department will spend over €2.8bn on supports to families through payments such as child benefit and the family income supplement in 2013.

Independent TD John Halligan said statistics showed that many women working in the home had no access to money other than child benefit, whatever the level of salary coming into the home.

Charities say careful consideration needed

The Society of St Vincent de Paul has expressed concern at the proposals contained in the report.

SVP's Caroline Fahey said a significant number of low and middle income families would be affected by the proposed changes.

She said she would like to see the suggested cut-off bands looked at to make sure families living in crisis were not left in a worse position than they currently are.

Barnardos has also said that careful consideration needs to be given to where thresholds are set in a two-tier child benefit system.

Its Head of Advocacy Catherine Joyce said the focus had to be on protecting children and cannot be purely on saving money for the State.

Cost neutral solution is sought

The expert group was originally tasked with finding a solution that was cost neutral or cost reducing.

Their analysis was based on the existing child benefit rate at the time of their analysis in 2011/2012 of €140 per month.

The group presented the final report to Minister for Social Protection Joan Burton in March 2012, however it was not published until today.

In the meantime, the Government introduced a €10 cut in child benefit in the most recent budget.

The group said its analysis model still holds in spite of this cut, but that the figures would need to be readjusted.

If the Government did decide to go with the two-tier system, the group said it would take 18 months to implement.

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