Cloudy with a chance of tax on child benefit

Posted on October 04, 2009 at 11:23 PM

I went to the Cinema at the weekend with my 5 year old daughter to see ‘Cloudy with a Chance of Meatballs’. It was an enjoyable animated film about a young inventor living on an island hit by a downturn because its main export, sardines, was no longer in demand.  The inventor brings happiness and hope of prosperity to the island when he invents a machine that can turn rain into food.  But then the machine starts to over produce and the weather takes a turn for the worse. It was a likeable film, surreal and far fetched. But it also had resonance with our boom and bust times. Going to animated films is one of the things I enjoy now about being a parent. That is partly because, apart from my work as a public representative, I don’t get to go out as much as I used to. These films can be good and usually there is a moral to the story (unlike many films for grown ups nowadays). It’s a nice way to spend time with my child. I also get to experience again a little of what it is like to be a child and the wonder and the leap of imagination that is the hallmark of children’s films, and childhood.

As adults we remember how our childhood was special and we think children are special. We bring this view of childhood to how we organise our society and all over the world Governments take steps to try to ensure that children have good childhoods and that their parents have support. The Irish Dail and Seanad took steps to provide support for children and their parents when it voted to introduce children’s allowance in 1943. Children's allowance started payment in 1944. The idea at the time was to support larger families and initially the allowance was paid for third and subsequent children. In 1952 the allowance was extended to the second child and from 1963 it was paid to all children. 

In his speech to the Dail in 1943 when he introduced the bill to provide for children’s allowance the Minister, Sean Lemass, gave a number of reasons for his decision not to means test for the allowance. The Government wanted to ensure that “there is not the slightest suggestion of charity associated with the allowance.”  A means test would involve an “inquisition in to the affairs of families which is often resented and which is, as a general rule undesirable”. The Minister also argued that a means test would be cumbersome and that it would involve a substantial additional cost.  The main argument in favour of the allowance according to the Minister was that having a large family meant greater hardship for those families. He argued that because wages are based on productivity and supply and demand, wages did not relate to family size, and the only way to ensure that parents had enough income to provide for the additional needs that come with having larger families was through the payment of an allowance for children.  He was very frank in his speech to Dail deputies that the consequences of bringing in children’s allowance would be the need for taxpayers, whether they had children or not, to pay more tax.

The arguments that were made in the Dail against means testing for children’s allowance are relevant today in relation to the calls to means test or tax child benefit.  Means testing for child benefit will mean that some families that would qualify under the means test for child benefit will not apply for it.  That this will be the case is borne out by the fact that many eligible families do not apply to the Department of Social Welfare for Family Income Supplement.  Taxing child benefit will be unfair because workers get the same wages with or without children and child benefit is the only extra income parents get in recognition of the cost of having children.  There is no tax allowance for children although there was at the time the children's allowance was introduced.  When children's allowance was introduced this income tax allowance was reduced to offset the cost.  In 1985 the tax allowance for children was abolished.  

Because child benefit is paid to parents we tend to think of it as a payment for parents and in particular as a payment for the mother, and as a result critics of universal child benefit tend to focus on the income and wealth of the parents in receipt of the payment and how some of these parents are well off.   But it is wrong to view this payment as a payment for parents. It is a payment to parents but for children.  Children don’t have wages and nor should they.  Although it is paid to parents, child benefit is the only income that is paid for children.  A universal child benefit cherishes all our children and their childhoods equally. If we tax or means test for child benefit the state will be required to discriminate between children.

When children’s allowance was brought in it was argued at the time that to do so was in the national interest. Why in what we consider more enlightened times would we choose to reverse such a progressive move? Our economic forecast is cloudy with a chance of storms. But there were darker clouds on the horizon in 1943 and look at the moral courage and leap in imagination that was taken by our legislators then.

References:

Dail Eireann – Volume 92 – 23^rd November 1943

Children’s Allowance Bill, 1943 – Second Stage

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