Middle-income families are set to bear the brunt of the Government’s proposed changes to Child Benefit, 
according to an expert report [1].
‘Squeezed’ middle-income families, not high earners, will suffer “the most significant losses” in relative terms under the proposed changes, the report says, according to The Irish Independent.
The report says Child Benefit should remain a universal payment and leaves the Government with two options: taxation of the benefit or a two-tier payment with a top-up for families on low incomes.
Some 400,000 families in total would face being taxed on their Child Benefit under option one.
Four out of 10 parents would lose out under a two-tier system, as they would only receive a reduced child payment.
Whichever model is taken would see middle-income families being hit hard.
Taxation of Child Benefit would see the payment reduced by 20pc or 41pc, in line with the income tax rates.
The two-tier model in the report uses the example of a basic payment of €108 a month and a top-up payment of up to €165 a month, dependant upon income levels.
The reason behind this combined figure being higher than existing child benefit rates is because the two-tier payment would replace not just Child Benefit, but also other child support payments, including Family Income Supplement and Qualified Child Increases.
And the group says it would be up to the Government to decide upon the actual rate to be paid.
The report was drawn up before the Coalition cut Child Benefit from €140 to €130 in the Budget.
“Either option would mean that middle to upper income (households) would on average experience losses in their weekly disposable income, with the most significant losses being experienced by those in the middle income (households), which is where most households with children are located in the income distribution.”
It adds: “For those in the lowest income (households), there would be, on average, gains in the weekly disposable income under the two-tier CIS (Child Income Support) payment approach, particularly for the lowest income (household).
“In contrast, under the taxation-of-Child-Benefit approach, the lowest income (households) would experience on average a loss to their disposable weekly income.”