John Deasy (Waterford, Fine Gael)
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Question 8: To ask the Minister for Social and Family Affairs if he has ever had any discussions with the Department of Finance regarding the granting of the family income supplement through the tax system; and if he will make a statement on the matter. [22892/05]

Séamus Brennan (Dublin South, Fianna Fail)
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Family income supplement is designed to provide cash support for employees on low earnings with families. This preserves the incentive to remain in employment in circumstances where the employee might otherwise only be marginally better off than if he or she were claiming other social welfare payments.

Improvements to the family income supplement scheme, including the assessment of FIS on the basis of net rather than gross income and the progressive increases in the income limits, have made it easier for lower income households to qualify under the scheme. Payment of FIS through the tax system has been considered by a working group including the social partners, the remit of which was to examine the role which refundable tax credits could play in the tax and welfare system. While the report of the group has not been finalised, it is expected that it will recommend that FIS continue to be paid by my Department, with a modified system of delivery and sustained efforts to improve take up.

One of the issues underlying the establishment of the group was a perception that the take up of the FIS scheme was low, that it was not reaching intended beneficiaries to the extent that it might and that payment through the tax and payroll systems might help in that regard. The take up of the scheme peaked at about 14,700 at the end of 1999 but subsequently declined to 11,700 at end September 2002. However, the examination undertaken suggested that some of the perceived disadvantages for eligible persons under the existing system, for example, the need to make an application to a State agency, could apply equally to FIS paid through the tax and payroll systems.

The examination also suggested that it would probably not be feasible to introduce a system whereby FIS would be paid automatically to eligible persons through the tax and payroll systems and that there would be considerable complexities involved in such a scheme for employers and for the Revenue Commissioners.

Since 2002, the numbers availing of the scheme have risen significantly. Average annual numbers of claimants for the years 2002 to 2004 are 11,716, 12,303 and 13,508, respectively. In the week ending 17 June 2005, there were 15,513 claimants. This represents an increase of 29% on the December 2002 figure of 12,043. The improved take up may be due to a number of factors, including generous increases in FIS income thresholds over successive budgets, an increase in the minimum weekly FIS payment to €20, expansion of the economy and greater flexibility in working arrangements.

The National Economic and Social Councilhas been commissioned to examine the effectiveness of replacing family income supplement and child dependant allowance with a second tier income support payment targeted specifically at addressing the issue of child poverty. It is expected that this report will be completed later this year.