The Commission on Taxation in a upcoming report will recommend taxing Child Benefit payments according to The Irish Independent. However, it says a tax credit should be given to lower-income families to compensate them for this.

It has already been reported that the Government is considering taxing Child Benefit and concerns have already been raised that this will hit single-income couples harder than double-income couples because of the effects of tax individualisation.

Currently, the Department of Social and Family Affairs pays €166 per month for each of the first two children in a family, with the payment for the third and subsequent children at €203 each per month.

But the 17-member commission decided these payments should be counted as income, as it was concerned that every family got the same amount of money, irrespective of their level of income.

However, the commission has also suggested considering other policies, such as means-testing the payment, since huge logistical difficulties will arise out of taxing child benefit.

Although it is not specifically stated in the report, the underlying thrust is that taxing Child Benefit may throw up more problems than it solves.

The report hints that means testing or cutting the benefit might be a better approach, but such recommendations are outside the terms of reference of the commission. Minister for Social and Family Affairs Mary Hanafin has said that there will be significant changes in the Child Benefit system.

The report of An Bord Snip Nua, the special group chaired by economist Colm McCarthy, recommended cutting Child Benefit to a standard rate of €136 a month, which would save €513m for the exchequer.

The proposal to cut Child Benefit is facing growing opposition. Already, some 11,000 parents and other concerned citizens have signed a petition against any change in payment. In both online and handwritten petitions, which are addressed to Taoiseach Brian Cowen, the families say that they oppose the introduction of means testing or taxation or reduction of the universal payment.

The petition was organised by a parents’ group called Protest Against Child Unfriendly Budget which was founded in April after the supplementary budget.

And in the past few days, the National Women’s Council of Ireland (NWCI) has also urged the Government not to cut, means test or tax the allowance. Some 45pc of NWCI members who responded in a survey said that any cut in child benefit would be a “financial disaster” for their families.