Tuesday, November 22, 2011

Update on the Economics of Child Benefit

Following on from my post yesterday on the economics of child benefit; I read today in the Irish Times that: "An advisory group established by (Joan Burton) earlier this year to examine ways of mean-testing or taxing the benefit has concluded in a preliminary indication that taxing the benefit is not possible. Its full report is not due out until March 2012."

For now, the preliminary indication from Burton's advisory group would seem to leave the medical card option (as suggested in yesterday's blog-post) as the only remaining possibility for reform (besides means-testing, self-declaration of income, or cross-referencing against tax records). As discussed yesterday, means-testing can have socially undesirable consequences. Furthermore, self-declaration of income (and voluntary abstention from claiming benefit) may be ineffective. Also, cross-referencing against tax records may be unsuitable for the Irish case: due to the preliminary indication from the group reporting to Burton. However, I would hope that cross-referencing against tax records is considered as a separate option to benefit taxation: in the report due out in March of next year.

Of course, the medical card option would have to involve a link between the computer-systems in the Health Service Executive and the systems in the Department of Social Protection. With respect to logistical IT concerns, Joe Carthy, from the UCD School of Computer Science and Informatics, was on NewsTalk radio before lunch-time today: suggesting that it is very much possible to make the computer-systems at Social Protection and Revenue "talk to each other". Carthy suggested that he could set this up easily himself, within a month. I wonder if he could set up a link between the systems in the HSE and Social Protection as easily? So that only medical card holders with children of a certain age would receive child benefit. Medical card holders are exempt from paying the income levy and the health levy; should they not also be (exclusively) entitled to child benefit?

1 comment:

Martin Ryan said...

Declan Jordan updated his thoughts on household economies of scale today: on the Cork Economics Blog. He discusses savings in child benefit from standardising rates and also from following the UK approach of reducing rates for third and subsequent children.