05/05/2009

Child Benefit Given Flat Rate Cut

Low-income families could be facing a severe cut to their disposable income following a legal tussle over child benefits.

The government's budgetary plan to impose a means tested cut to child benefits has collapsed, leading to speculation that a flat rate cut in the payments is likely to be imposed.

It is understood major legal obstacles and logistical difficulties arose over Finance Minister Brian Lenihan's plan to tax the benefits using means testing.

Instead, a 10% flat cut in the rate is the likely step, meaning families would face a drop from €166 to €150 a month for each of the first two children, and from €203 to around €180 for each subsequent child.

In the latest budget, Mr Lenihan changed the age criteria for Child Benefit, with children aged 18 in full time education losing their Child Benefit from January 2010.

Mr Lenihan imposed the changes in order to cut the Government's €2.5bn bill for child benefit payments.

(DW/BMcC)

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