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Computers not ready for children tax

IT'S a case of 'computer says no' for Dublin West TD Joan Burton.

Ms Burton has admitted that child benefit for parents who earn more than €100,000 will not be taxed in December's Budget because the State's computer systems are not ready for it.

The Dublin West TD conceded that a move could not be arranged in the near future, just days after describing it as her "personal preference".

"Obviously, that [taxing child benefit] would require having the capacity to join up the information technology of the Department of Social Protection and the Revenue Commissioners, and that would require a fair amount of work," she said.

"But it's something that has happened in other countries. I think it's something we will be looking at but it's certainly somewhat down the road and it's not in the context of the current budget discussions."

It's understood that there are approximately 113,500 people earning above the €100,000 threshold. But due to the lack of a link-up between Government computer systems, it is not known how many of them are receiving child benefit payments.



Savings

The news will come as a major blow to Ms Burton, who is under intense pressure to find substantial savings in her department.

She is well aware that an additional tax for wealthy people would be a fair and effective way of raising funds.

And the admission will also raise fears that the Government will impose a flat rate cut in December's Budget, the second such move in two years.

Ms Burton signed off on cuts to child benefit for the third child and subsequent children last year, while keeping it at €140 for the first and second child.

Ms Burton refused to say whether another flat rate cut is on the cards, adding that it will be discussed by the cabinet after the summer recess.

"In the autumn, there will be detailed discussions in Cabinet," she said.

Ms Burton's proposal to slash the benefit for high earners had proved a hit with members of her own party, who will now be disappointed at her climbdown.

Labour party sources told the Herald that there exists a "strong desire" among backbenchers to tax child benefit for high earners.

"It would be seen as a coup for the Labour party, rather than Fine Gael if we could tax those on €100,000 or more," one party source said.

hnews@herald.ie