Marie Moloney (Labour) | Oireachtas source

I have previously expressed my doubts about the taxation approach. I believe it would be hard to implement and could, in some cases, be grossly unfair. For example, a couple with three children and a gross household income of ¤50,000 per annum might appear to most people to be fairly well off. However, following tax, PRSI and USC deductions and mortgage payments this might not appear as attractive. As stated by the Minister in her speech, many, if not most, middle-income earners are putting their child benefit payments towards meeting mortgage repayments. A taxing of child benefit could in some cases result in a person being liable for higher taxation. Child benefit in respect of a person in the higher tax bracket would be taxed at 41%. Could a person in a household who is not earning but in whose name the child benefit is paid be liable for tax under the individualisation scheme? How will separated persons be dealt with? To my mind, the taxation approach would be messy and complicated.

Looking at examples Nos. 4 and 6 in the report, based on three children, it states that someone with an income of ¤27,000 would lose ¤1,012 in a year, while someone on ¤100,000 would lose ¤2,066. There does not seem to be any equity there as the person on ¤100,000 has an income almost four times that of the person on ¤27,000 but loses only twice the amount of child benefit. The two-tier system, if it is to be implemented, must take cognisance of disposable income in the household. It is widely believed that anything below ¤25,000 is on or below the poverty line but I believe that this base line is much too low. As I have already pointed out, gross pay of ¤50,000 may look attractive but, in reality, disposable income is much less. After all deductions, including mortgage payments, household bills and so forth, there is often not much money left in a household with three children. Some households may have a student at third level and must earn ¤42,000 or less, gross, to qualify for a full grant. For such households to lose a large chunk of their child benefit would be a huge financial blow.

I know we will have an opportunity to dissect this report further at meetings of the Joint Committee on Education and Social Protection but I ask the Minister to bear in mind that when a person applies for a medical card, his or her mortgage, medical expenses, travel to work expenses, child care costs and so forth are taken into account. If the Minister is considering the two-tier system, I ask that such expenses be taken into account and that the threshold figure for a top-up would be net of all of them.