Tax on child benefit, water and homes may cost €3,000

FAMILIES could be hit with extra levies of up to €3,000 a year under recommendations for a tax on the children’s allowance, water charges and property tax to be presented to the Government next week.

They are among 250 proposals in a report by the Commission on Taxation which will be presented to Finance Minister Brian Lenihan in the coming days and discussed by the cabinet in early September.

The 700-page document, which will feed into the Government’s deliberations on December’s budget, is expected to recommend:

* The abolition of stamp duty and introduction of an annual tax on all homes, averaging €1,000, with an exemption for the elderly and those on low incomes.

* The installation of water meters in all homes to raise €500 million for local authorities. The Socialist Party claims this would cost around €700 per household per year.

* The phasing-out of tax relief on bin charges and trade union subscriptions.

* A carbon tax on energy use.

* Treating Child Benefit as earnings and subjecting it to tax, with a tax credit given to lower-income families.

* The abolition of artists’ tax exemption.

* PRSI to be paid by all workers, regardless of income, and changes to the ceiling of €75,036 up to which it is currently paid.

The report is expected to recommend that some of the extra tax burden be cancelled out by reducing existing taxes such as the income levy.

Fine Gael warned last night that the economic recession would be made “deeper and wider” if the Government attempts to “tax its way out” of the current financial difficulties.

Finance spokesman Richard Bruton said a person on the average industrial wage is already paying half of what they earn to the State through income tax, PRSI and health and income levies.

“Already, in the last year the Government has announced 20 new taxes or tax hikes, costing a middle-income family over €5,000 per year,” he said.

The Labour Party said media leaks of the report suggest its focus will be on hitting lower and middle-income families.

“It will be a matter of great disappointment if the report of the commission simply leads to a further round of extra charges for families who have already been hit by levies and tax increases,” said finance spokeswoman Joan Burton.

The Socialist Party said it is gearing up for “a massive campaign of civil disobedience” to oppose water charges.

Fingal County councillor Ruth Coppinger said: “It would be a bigger campaign than in the 1990s because the economic backdrop is different now. Incomes are being slashed; people just cannot afford to pay these charges.”