Wednesday, January 15, 2014

15/1/2014: Are Irish Family Benefits Really the Highest in the OECD?..


An interesting chart on public spending relating to families across the OECD states:


Ireland is a clear leader in terms of family supports. But the bulk of our lead comes from cash payments (second only to Lux). Which suggests that Irish families do not need another tax break or lower tax burden.

There is a problem, however, with this assessment. Here's why.

Per methodological note behind the chart (see here: http://www.oecd.org/els/family/PF1_1_Public_spending_on_family_benefits_Dec2013.pdf)

"Child-related cash transfers to families with children [include] …child allowances, with payment levels that …sometimes are income-tested (PF1.3); public income support payments during periods of parental leave (PF2.1) and income support for sole parents families." Which, obviously, means the chart is distorted by non-working parents allowances and payments.

Furthermore, "Public spending on services for families with children includes, direct financing and subsidising of providers of childcare and early education facilities, public childcare support through earmarked payments to parents (PF3.4), public spending on assistance for young people and residential facilities, public spending on family services, including centre-based facilities and home help services for families in need." Which largely does not apply to the majority of Irish families outside income-tested cases.

Finally, "Financial support for families provided through the tax system. Tax expenditures towards families include tax exemptions (e.g. income from child benefits that is not included in the tax base); child tax allowances (amounts for children that are deducted from gross income and are not included in taxable income), child tax credits, amounts that are deducted from the tax liability…" Some of these do apply to working families with children in Ireland.

Worse: "…tax advantages for married people as exists in, for example, Belgium, France, Germany and Japan are not considered to serve a ‘social purpose’, and are not included here (regardless of whether or not such measures are part of the basic tax structure). Only the value of support for children through such measures is included."

Lastly, it appears that data above is not adjusted for the size of families.

In other words, we have no idea as to where Ireland really stands in comparison to other countries in terms of subsidies/supports for working families...
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