THE CONTROVERSIAL proposal to cut child benefit by €10 a month remains a “live option” for Government ahead of three successive days of Cabinet meetings devoted to the budget this week.
The Cabinet meets today, tomorrow and Thursday to try and finalise the measures that will make up the €3.8 billion adjustment, a process that has been described as “fraught” by one Minister.
In advance of the meeting, a senior Government source confirmed that the child benefit cuts remained very much on the table despite other measures being excluded on grounds of being “unpalatable”.
The proposed cut, if included in the budget, would be potentially damaging to Labour which, during the general election campaign made no reduction in child benefit a red-line issue for any coalition with Fine Gael.
The cut in universal benefit was one of what was described as a “gamut of options” that was presented to Cabinet arising from the comprehensive review of expenditure overseen by Minister for Public Expenditure Brendan Howlin.
The proposal has survived preliminary scrutiny by Ministers notwithstanding Tánaiste Eamon Gilmore making the retention of child benefit rates a precondition for coalition. Some other measures considered as politically unpalatable have already been excluded from the budget.
Those measures considered too controversial politically included a reduction to jobseeker’s allowance, scrapping the bereavement grant (an €850 payment designed to offset funeral bills) and reductions in the half-rate carer’s allowance, paid to those who care for more than one person or who are entitled to other payments.
Minister for Social Protection Joan Burton has been examining ways to compensate those on low income if child benefit is cut.
An advisory group established by her earlier this year to examine ways of mean-testing or taxing the benefit has concluded in a preliminary indication that taxing the benefit is not possible. Its full report is not due out until March 2012.
Taoiseach Enda Kenny said yesterday that while no final decisions had been taken on the shape of the December 6th budget, cuts were inevitable if people wanted to avoid paying extra taxes. He would not rule in or rule out any possible cut in child benefit.
“If we are not to make the cuts that have been agreed in broad principle, that is to take out about €3.8 billion this year, then the only alternative is to increases taxes, and increases in taxes affects jobs directly,” said Mr Kenny, who was in Knock airport for the announcement of new Ryanair routes.
Minister for Finance Michael Noonan said he would not indulge in speculation, saying the only decision that had been made is to increase VAT by 2 per cent.
Ryanair chief executive Michael O’Leary, also in Knock, called for the scrapping of the child benefit payment, saying people should not be “subsidised” to have sex.
“This broad band of just giving everybody children’s allowance – it’s like the Government subsidising people to have sex. Now, I don’t know about you, but I’m very happy to have sex for free, I don’t need a subsidy for it,” he said.
Other adjustments that look increasingly likely in next month’s budget include increases in capital gains tax and capital acquisitions tax; a small increase in motor tax; possible increases to Dirt tax; as well as a possible carbon tax of an extra €5 a tonne (a manifesto promise of both Coalition parties).
Child benefit represents 10 per cent of all Department of Social Protection expenditure. It is estimated that close to €2.1 billion will be spent on the entitlement this year. The monthly rate, for first and second children, is €140 a child. The benefit has been cut in the last two budgets.
