Lenihan says child benefits to be taxed or means tested

CHILD BENEFIT will be either means tested or taxed, Minister for Finance Brian Lenihan has confirmed

CHILD BENEFIT will be either means tested or taxed, Minister for Finance Brian Lenihan has confirmed. The Minister also said that social welfare rates in Ireland were “far more generous” than in other countries, and this is “something we have to reflect on”.

In an interview on RTÉ's This Weekprogramme yesterday, Mr Lenihan said the Government had decided to either means test this payment or to tax it. It was "important that we target support for children for those who need it most in a targeted way. Clearly an arrangement where the wealthy receive the same payment as those on very moderate or low income is not a correct way to proceed in the present environment."

There were important technical issues involved in either taxing or means-testing child benefit. “Either way the Government is determined to do it.”

The Government had not arrived at a decision on the issue of changing social welfare rates. While it had opted not to cut social welfare benefits in the recent Budget, rates in Ireland were far more generous than in other countries and this was something that would have to be reflected upon.

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The Government had looked very carefully at social welfare payments in the run-up to the supplementary Budget, but it did not accept that the cost of living was reducing for those most in need. In those circumstances, the Government was not prepared to cut the rates of social welfare payments.

Mr Lenihan also said that if the Government nationalised Allied Irish Bank and Bank of Ireland it could prove very difficult to attract funds from abroad.

Ireland had a very exposed economy and had been hit first by the international financial tsunami, but other economies were following suit. “We are reacting speedily to what is happening by putting our own house in order and recreating international confidence in Ireland,” he said.

Mr Lenihan denied that the Government was saving the banks at the expense of the economy and taxpayers. There had to be a functioning banking system if there was to be a functioning economy.

If the Government nationalised AIB and Bank of Ireland, it would mean that the entire banking system was then 100 per cent in State ownership. “I believe it would be very difficult for Ireland to attract funds from abroad, much more challenging were we to do that.”

He also maintained that if these banks were to have “further exposures which require investment from the taxpayer, the taxpayer will have to take a larger stake in these institutions”.

Martin Wall

Martin Wall

Martin Wall is the former Washington Correspondent of The Irish Times. He was previously industry correspondent