Government advised to tax maternity leave benefit

Departments last night refused to be drawn on reports that the Government is considering taxing maternity leave benefit.

The news came as a tax group report was released, advising the Government to introduce a two-tier social welfare system.

It was reported yesterday that the Government is considering introducing a tax on maternity benefit in December’s budget, which could raise €90m for the exchequer.

The Sunday Business Post said Revenue had been asked to examine introducing the changes, which would recoup payments from women. According to the report, there has been a threefold increase in the cost of the state benefit, from €99m in 2002 to €309m last year.

Any clawing back of funds could see women lose out on tax or PRSI refunds under maternity leave arrangements. Certain tax refunds could be withdrawn if a woman returning to work had, or even had not, received top-up maternity leave payments from an employer, the report said.

The Department of Social Protection, which oversees State maternity leave payments, said it would not speculate on what might be contained in the budget.

The department referred the issue of taxation to the Department of Finance. That department last night said no decisions for December’s budget had yet been made.

Meanwhile, a tax strategy report for the Government released at the weekend proposes a two-tier social welfare system for Ireland.

New welfare claimants would get lower benefits, but the move could result in a legal challenge, the report from the high-level advisory group said.

The report gives an indication of options open to the Government for Budget 2013. It says a reduced weekly rate could apply to new claimants in areas such as jobseekers’ benefit/allowance, illness benefit, and the disability allowance.