Burton suggests high earners face tax on child benefit

Social Protection Minister Joan Burton has suggested the public may have to choose between a child benefit means tests system or a potential new tax on rich families receiving the support.

The claim was put forward in Ms Burton’s latest suggestion on how to help balance the social welfare budget books.

In an interview over the weekend, Ms Burton said her department’s €21bn war-chest must be reduced again in next year’s budget if the country is to survive the financial crisis.

Among her main money-saving targets is child benefit, which under current rules sees anyone with children receive at least €140 per month — regardless of their wealth.

“I favour a stronger integration between the social welfare system and taxation, and that people on very high incomes — in excess of, say, €100,000 — perhaps would contribute some tax in relation to their child benefit receipts,” Ms Burton said.

“Child benefit is a really valuable payment for women. At the moment, I’m very conscious that it is supporting an awful lot of families, particularly families where the husband may have been self-employed.

“Means testing would just involve a huge amount of administrative and bureaucratic effort. I think we have to find neater solutions than that.”

The claim effectively signals either an across-the-board means test or new taxes for households with incomes over a set level.

While Ms Burton has previously floated the idea of some form of system to cut child benefit costs for wealthy families, a similar proposal by the late Brian Lenihan was rejected in 2009 by legal experts.

However, the suggestion has received the support of Brendan Dempsey, regional president of Cork’s St Vincent de Paul.

He said the move is what ordinary people want to see happen after almost four years of austerity measures.

“It’s a fair thing if people who can afford to pay it [the potential new tax] are asked to instead of a means test for everyone. If they can then they ought to,” he said.

“People who are just scraping by are terrified they may be just over the threshold if a means test comes in. You can see that with the medical cards as well. So I’m sure they’d back the minister if this [the tax] was brought in fairly.”

He said in his experience “people who have the money are very generous about these things. I’m sure they would be quite willing to pay the tax.”