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Wednesday 18 October 2017

Miriam Donohoe: Don't cut child benefit? I should never have been getting it in the first place

I find it impossible to defend the fact that I received child benefit for my two children over the past 20 years.

In that period, I collected approximately €20,000 from the State. Money which, in truth, I didn't need and which should have been diverted to the less well-off in our country.

Yes of course it was great to get it. I remember one year saving all the children's allowance for our annual holiday spending money.

Well-paid

But the fact is that myself and my husband were lucky enough since the children were born to have been in continuous employment and well-paid jobs. Sure, we worked hard, and like so many other couples we were paying a mortgage and, particularly in the early years of our marriage, were watching the pennies. However that did not justify a monthly tax-free hand-out from the State.

You may ask why didn't I leave the allowance in the State coffers and not draw it down. I took the view it was legally mine and I was entitled to it and why leave it behind to be possibly wasted and squandered by the Government.

It looks now like the impossible is to happen and the December Budget will finally see the Government do something about the basic unfairness at the heart of the child benefit system.

The British Chancellor of the Exchequer, George Osborne, told the Tory party conference yesterday that the well-off will no longer receive child benefit and our Minister for Children, Barry Andrews, said last night that the Government will look at doing the same here.

A deeply unpopular government has one advantage over a popular one -- it has little to lose when it comes to making tough decisions.

Child benefit should have been means-tested or taxed well before now. But it became one of those political sacred cows that mere mention of sent the country, and especially mothers, into fits of rage.

Anger

Change will lead to hot and heavy arguments. The main one will be that the bankers, through their reckless lending, have burnt a huge hole in our public finances, and ordinary people are now being asked to take the hit. We will hear that families won't be able to make ends meet. We will hear about the importance of child benefit as an income to mothers without independent means.

The airwaves will be flooded with angry callers and interest groups will talk about the rights of children not being respected.

But when you strip away all the emotion, there is a simple argument to be made -- people with plenty of money are getting payments that this country can no longer afford and it is not right or proper that they should continue to do so.

Some will argue that means testing it will be complicated, and there will be others who say the taxing of it will prove an administrative nightmare. But the fact is we cannot afford it.

At the moment, it costs the State €2bn in child benefit payments annually. And that's after last year's reduction of the payment for first and second children from €166 to €150.

It may be tempting for the Government to try to make savings by just cutting the basic payment across the board. In doing so, it would avoid the need for any new system of tax collection or means testing. But that's the easy way out.

If Brian Lenihan and his colleagues truly believe in tax equity, they will give the same amount to those families who need it, and cut the amount that the better off get into their hands.

We can't have a situation where taxing it might penalise those in work on modest incomes, while those out of work retain all their benefits. The last thing we need are further disincentives for people to go out and work so we need the Department of Finance to work out a system that makes sense.

Perhaps it could save some time by adopting the new British model about to be implemented!

It will be a brave government that will push through change in the child benefit system. It has my support.

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