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Tuesday 24 October 2017

Andrew Lynch: Children's allowance will be cut - but not reformed in Budget

George Osborne might not sound much like an Irishman.

As heir to a baronetcy in Co Waterford, however, Britain's squeaky-voiced Chancellor of the Exchequer could probably qualify under the Jack Charlton rule.

Now he's just lobbed a hand-grenade into this country's Budget debate -- by axing child benefit payments to parents who are earning £44,000 (€50,950) or more.

For a Government that's desperately trying to raise €4bn by December, this is bound to start a serious debate within our own Department of Finance.



OPTION

Osborne's financial position may be bad, but it's nothing compared to what Brian Lenihan has to cope with.

If a right-wing British chancellor feels he can no longer offer this payment to families on relatively ordinary incomes, then an Irish Minister for Finance must at least wonder if he should be doing the same.

There's just one problem.

According to Children's Minister Barry Andrews, there just isn't enough time to work out the legal and administrative barriers to tax or means test the payment this year.

That just leaves the option of another flat-rate cut across the board -- which would leave the Government wide open to the accusation that it's raiding the kiddies' piggy banks to pay for the sins of grown-up bankers.

The argument for reforming child benefit is very clear.

No matter how well or how badly the economy is doing, it seems odd for the State to hand out money to people who clearly don't need social welfare payments to bring up their children.

It's a crude, regressive system that pays a millionaire the same amount of cash as a single mother in a council flat.

The argument for leaving child benefit alone is less emotive, but just as logical.

It usually goes to mothers and in some cases is the only guaranteed income they have to buy things such as schoolbooks which are provided free in Britain. If the Government wants to make the rich pay more, then they should use the income tax system instead of tinkering with a tried and tested method of protecting the most vulnerable.

In normal times, any sensible politician would stay well away from the notion of using kids as a vehicle for raising money.

There are still raw memories in Leinster House over the two governments that were brought down over the mistreatment of young people.



RECKLESS

Garret FitzGerald was severely embarrassed in 1982 when he tried to put VAT on children's shoes, while Albert Reynolds' career was finished by the alleged cover-up of a report on a paedophile priest.

Unfortunately, this Government made the reckless mistake of trebling child benefit during the boom years, leaving them with a massive annual bill that they just don't have the tax revenue to pay.

Last year, Lenihan bit the bullet and introduced a modest flat-rate cut, which reduced the overall burden from €2.5bn to €2.26bn. That was a start -- but with a €50bn bank bailout bill now staring us in the face, far more drastic measures are most definitely back on the agenda.

Sadly, it's all too easy to believe Barry Andrews' claim that the groundwork for targeting child benefit at truly deserving cases only just hasn't been done.

That's the same excuse for not introducing a property tax or water charges.

As usual, short-termism rules the day -- which means that Fianna Fail will probably just shift the idea into its four-year Budget plan, safe in the knowledge that it will be other parties who have to implement it.

That's good news for those who want to see child benefit remain a universal payment -- but bad news for anyone else, since it means a "slash and burn approach" that will raid our pockets without introducing any meaningful reform.

The 1916 Proclamation famously promised to "cherish all the children of the nation equally". Brian Lenihan must now decide whether that's a luxury we can still afford.

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