Committee Reports::Report - The Impact of State Tax and Social Welfare schemes on the Family::07 February, 1996::Appendix


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APPENDIX A

Report to the Joint Committee

by Mr. Colm Rapple

The impact of state tax and social welfare schemes on the family

-- an analysis of some anomalies which may discriminate against the family.

A report to the Joint Committee on the Family

Colm Rapple

14 January 1996

Summary of Recommendations

Tax position of lone parents

•There is a case for improving the tax position of lone parents to bring them more in line with married couples. This can be done by extending a married couple’s double tax bands to lone parents — cost £7 million a year; extending the married tax exemption limits to lone parents — cost £13.5 million; and/or not phasing out the current post-bereavement allowance. A fairer, if more radical approach would be to relate both allowances and tax bands to the number of individuals in a tax unit. (page 11)

Child care allowance

•The provision of tax relief for child care raises a wide range of issues. It would be difficult to focus the benefits on those most in need. As a tax relief to all parents, it would obviously confer no benefit on those outside the tax net. It would, in fact, be no different to the broadly based child tax allowances which were dispensed with some years ago in favour of more focused social welfare benefits.

If it were introduced as a tax allowance for payments actually made to child minders, it would confer no benefit on parents who provided their own child minding. It would discriminate against the stay-at-home spouse. This is a very large group. It is estimated that 58% of women receiving Child Benefit have no other independent source of income.²

Any conclusion with regard to tax relief in respect of child care would require a deeper study to ensure the most effective targetting of resources. (page 13)

Tax and cohabiting couples

•The tax position of cohabiting couples needs to be addressed in the light of the divorce proposals. On the basis of the current proposals there could be a built-in financial incentive for a separated individual to get a formal divorce if he or she wishes to enter a second relationship. It is only by getting a divorce and remarrying that the couple in a second relationship can claim the extra tax concessions available to married couples.

The issue is a complex one. On the one hand there is a view that the State should discriminate in favour of families based on the formal contract of marriage and that it is therefore justified in providing extra tax concessions for such families. But there is also a view that a separated person in a second relationship should not have a tax incentive to seek a divorce perhaps against an unwilling spouse.

²Income Distribution within Irish Households, D Rottman, Combat Poverty Agency, 1994

It is an issue which needs further consideration beyond the scope of this report. In the short term consideration should be given to easing the restriction on tax-saving covenants and providing special exemptions from inheritance tax on the lines already applying to siblings living in a jointly owned home. (page 16)

Tax restrictions based on family relationships

•The Revenue Commissioners should undertake an examination of all tax concessions from which people are excluded by reason of family relationships to see if fears of potential abuse are fully justified. In particular the restriction on the availability of tax free farm leasing income and the 80% farm asset rule for Agricultural Value Relief need a reassessment. The inclusion of the family home in the definition of “gross assets” for the Agricultural Relief is undesirable. If necessary its exclusion could be compensated for in terms of revenue by a small reduction in the 80% requirement. (page 19)

Tax concession in year of marriage

•A special tax concession in the year of marriage could be justified on the basis of encouraging marriage rather than cohabitation or as a form of State grant towards the costs of getting married and setting up home. The State already contributes towards the cost of setting up home by providing a grant to the first time purchasers of new houses. That is not confined to married couples. The benefits of tax concessions would be unevenly spread depending on the absolute and relative incomes of the couple getting married. If a marriage grant were deemed desirable it could best be provided as a direct payment. Page 19)

Family affairs unit in Department of Finance

•One of Dr. Kennedy’s recommendations was the establishment of a “Family Affairs Unit in the Department of Finance with a brief to co-ordinate policy and expenditure programmes regarding the family and to devise new approaches as required. Such a unit would include representatives of the Departments of Justice, Education, Health, Labour, Social Welfare and other relevant Departments. The unit would be more than an interdepartmental committee or a Commission of Enquiry; it would be a strategic planning unit. It would not seek a policy blueprint in relation to the family, but would seek to build on the considerable structure already in place, undertaking reconstruction, where necessary.” This suggestion clearly still has merit. (page 21)

Programme budgeting

•It would also be useful if the state programmes aimed at supporting the family were once again prepared and published in the form used in the Comprehensive Public Expenditure Programmes which were issued by the Department of Finance in the late 1980s. These provided for a clear statement of objectives and the bringing together into single programmes of all expenditure aimed at that objective. (page 22)

Child benefits

•The State’s family income support schemes clearly require restructuring. While some anomalies could be removed with relatively minor changes, the Government is clearly committed to a major overhaul. Budgetary constraints may require that the changes have to be made over a number of years. It is essential that all of the proposed changes be spelt out in advance and the financial committment made to their full implementation. Part implementation of a programme for change could create more anomalies than it would cure. (page 25)

Family income supplement based on net pay

•If Family Income Supplement is to be retained, eligibility should be based on net income rather than gross income in order to remove the current poverty trap which can result in people being net losers as a result of an increase in wages (page 27).

Better dissemination of information

•In view of the very low take-up of Family Income Supplement and the survey results which show a lack of information among social welfare recipients, extra resources should be provided to ensure a more adequate and effective dissemination of social welfare information (page 28).

Medical card guidelines

•Details of all the guidelines used in considering medical card entitlement should be made readily available (page 29).

Retention of medical card entitlement

•Because of the importance attached by many families to the medical card, and the undoubted real value it has, there is a clear case for introducing some method of phasing out its benefits as a family’s income rises. This could be achieved by introducing a time delay in losing the entitlement, or by phasing benefits out on a percentage basis, or by easing the strict application of income guidelines. Already long-term unemployed people taking up Community Employment Schemes etc. are entitled to retain their cards for two years. A similar concession could be extended to people whose incomes rise as a result of either themselves or their spouses taking up work. Such a concession could, at least, apply to the children of such couples (page 31).

Rent allowance survey

•While statistical data on the number of young people in receipt of Rent Allowance have been collated, no qualitative study seems to have been done on the people involved and why they are living outside family homes. Such a study should be undertaken with a view to pinpointing the problems and devising solutions (page 36).

Young people and rent allowances

•If there are incentives for young people to leave the family home they can not be eliminated by simply reducing or abolishing the relevant benefits. The social welfare system must provide for young people who may be forced for one reason or another to leave the family home. Abuse of the system can be prevented by applying the guidelines already laid down by the Health Boards but the real solution to the problem lies in better provision for young people through alleviating poverty, creating employment and providing better opportunities and incentives for education and training (page 37).

Training and educational opportunities for young people

•There seems to be a gap in the current training and educational opportunities for 16 to 21 year olds who have dropped out of formal education and into early unemployment. The current exclusion of under 21s from certain FÁS training and Community Employment Schemes needs to be examined (page 38).

Access of women to job and training programmes

•The problems with regard to access for women-in-the-home to State sponsored training and employment schemes have been recognised and there seems to be a commitment to solving them as resources permit. But a balance will have to be drawn between, on the one hand, ensuring that women in the home are not disadvantaged if they wish to rejoin the work force and, on the other, ensuring that women who choose to see their work as home-makers get their share of resources (page 39).

Adult “dependency”

•The notion of adult dependency should be quickly removed from the social welfare code. This will require a relative increase in the payments for “adult dependents” as currently defined (page 40).

PRSI entitlements for child minding

•Since 1994 a PRSI allowance towards pension entitlements is given to parents for periods spent in child-minding up to the time that the child is 12 years of age. It was introduced as 6 years of age but increased to 12 years from 1995. This change only applies from 1994 with no retrospection, so no cost will be borne by the exchequer for many years. There is a case to be made for extending the change to earlier periods (page 41).

Support for carers of the elderly

Increased State support is undoubtedly warranted on economic criteria alone. Additional studies need to be done in this area to pinpoint where extra resources should most effectively be spent (page 42).

THE STATE, through its taxation and public expenditure programmes, has a major impact on personal income. On average, the money taken from families by way of income tax, PRSI and indirect taxes on spending is returned, almost in full, in the form of direct cash payments and non-cash benefits such as medical services, education, subsidised housing, roads, sanitary services etc.³. But while the average family gets nearly as much back in the form of benefits as it pays in taxes, there is a wide variation around that average. All but a very few families are either net winners or net losers.

This report looks briefly at whether the global impact of State intervention is favourable to family units as opposed to individuals. But that type of analysis is concerned only with trends and averages which can often cloak the reality faced by the bulk of individuals. The main objective of the report is to zone in on individual taxes and spending programmes which may in their operation and/or interaction discriminate against the family.

•DEFINITION OF FAMILY

The concept of “family” can be variously defined. While the family is given particular recognition in the Constitution, it does not provide a definition. For that we must rely on Court judgements.

Article 41.1 reads

“1. The State recognises the Family as the natural primary and fundamental unit group of Society, and as a moral institution possessing inalienable and imprescriptible rights, antecedent and superior to all positive law.

“2. The State, therefore, guarantees to protect the Family in its constitution and authority, as the necessary basis of social order and as indispensable to the welfare of the Nation and the State.”

Article 41.2 reads:

³ In 1980 the final income of all households i.e. after State benefits was 2% higher than their initial direct incomes. See Redistributive effects of State Taxes and Benefits on Household Incomes in 1980 (CSO 1983). An update of that report based on the 1987 Household Budget Survey will show little significant change in that position.

“1. In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved.

“2. The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.”

In 1966 the Supreme Court ruled that “the family referred to (in Article 41) is the family which is founded on the institution of marriage and in the context of the Article, marriage means valid marriage under the law for the time being in force in the State”.

In the Murray tax case Justice Costello in the High Court said that he derived his concept of marriage in a Constitutional context from the Christian notion of “a partnership based on an irrevocable personal consent given by both spouses which establishes a unique and very special life-long relationship.”

This definition excludes cohabiting couples and unmarried lone parents. But there is a view that Article 41.2 could apply to unmarried mothers. In a standard text book on the Constitution⁴ the following is reported:

“Writing extra-judicially⁵ Walsh J hinted at the possibility that Article 41.2 might not be confined exclusively to married mothers -- he observed that the word “family” does not occur in that provision -- and in L v L, McCarthy, J cautioned that he was not to be taken as holding that the section was restricted to mothers of families based on marriage.”

But there is a wide range of other definitions and concepts of the family. The European Parliament adopted the following definition in 1983:

“An affective, educational, cultural, social and economic unit, the user and consumer of goods and services, as well as a unit in the progress of change”.

⁵The Irish Constitution, J. M. Kelly, Gerard Hogan and Gerry Whyte, Buerrworths, 1994

⁶The Constitution of Ireland 1937-87 (Dublin, 1988)

The United Nations which proclaimed 1994 as the International Year of the Family uses a very broad technical definition as follows:

“Any combination of two or more persons who are bound together by ties of mutual consent, birth and/or adoption or placement and who, together, assume responsibility for, inter alia, the care and maintenance of group members, the addition of new members through procreation or adoption, the socialisation of children, and the social control of members.”

A pragmatic approach is taken throughout this report. It looks at the actual application of the tax and social welfare schemes. Both take account of Supreme Court judgements but the Department of Social Welfare has taken a different approach than the Revenue Commissioners. In response to legal challenge and court judgements the tax law was changed to extend the more favourable treatment enjoyed by some cohabiting couples to all married couples whereas social welfare restrictions applying to married couples were extended to cohabiting couples.

A couple living together who are not formally married can opt to be treated as two single people for income tax purposes They cannot opt to be treated as two single people for social welfare purposes.

The Revenue Commissioners take a strictly legal view accepting a couple as married “if a marriage ceremony recognised by the civil law of the State has taken place”.

The law, it seems, cannot discriminate in favour of cohabiting couples giving them over and above those enjoyed by a married couple. But there is no requirement that cohabiting couples have to enjoy the same benefits as married couples. And in many cases they don’t

This exclusion of cohabiting couples, particularly those with children, from certain State benefits available to married couples can be viewed as anomalous. But it could be equally viewed as anomalous if a cohabiting couple, who had entered no formal committment to each other or to their children, were to get similar recognition from the State as a legally recognised family.

The current anomalies are most acute for people in second relationships. Unless they have their marriage annulled they cannot have their second relationship recognised as a legal “family”. The introduction of divorce would provide an avenue for having the second relationship recognised as a family but only if the person chooses to get a divorce and remarry.

The issue is a very broad one beyond the scope of this report. The situation is that the law can, and often does, discriminate in favour of legally recognised families. The adoption of different definitions of family could remove some of the anomalies outlined in later sections but no single definition would remove all the anomalies and any change in definition would also certainly give rise to fresh anomalies.

•DISCRIMINATION AGAINST THE FAMILY

Discrimination against the family can arise in a number of different ways.

•Taxation can bear more heavily on people in family units than on those outside them creating an incentive to stay out of family units or even to leave them.

•Social welfare programmes may similarly provide lower benefit to those in family units.

•A combination of tax, social welfare, and secondary benefits (medical cards etc.) can create poverty traps which may impinge to a greater extent on people in family units by creating disincentives for them to improve their position. In the worst cases the benefit of any additional income earned in more than offset by a loss of benefits. In so far as such poverty traps impact more on family units they can be taken as discrimination against the family.

•The operation of social welfare schemes may provide an incentive for people to leave a family unit.

Specific examples of these are examined below but first an overall view of the impact of State taxation and spending programmes on households.

•OVERALL IMPACT OF STATE INTERVENTION

While State spending programmes put as much into the average family’s coffers as taxation takes out, there are very few average families. The overall impact of State intervention is to redistribute income so that practically all families are net gainers or net losers. Table 1 looks at the impact of direct income taxes and direct State payments on families categorised by various stages. Indirect (spending) taxes and non-cash State benefits are ignored.

The net impact of taxes and direct State benefits is almost nil. The average family paid £46 in taxes and got £46 back in benefits. So disposable income was some 98% of original gross income.

Only the “empty nest” and “retired” category are net beneficiaries. All the others are net losers. The loss is greatest for those with no children and those with young children. Those in the retired category are significant net beneficiaries. They end up with disposable incomes of twice their original direct income reflecting, of course, the fact that most people in this category are drawing a Social Welfare pension.

The clear conclusion is that State transfers favour the elderly. Their relative position improved greatly between 1980 and 1987. That trend reflects pension increases over the period which were significantly in excess of inflation. The shift in favour of pensioners has slowed somewhat in more recent years.

There is no evidence of any bias in favour of families with children. Figures from the Household Budget Survey categorised by family composition shows couples with one child paying three times more in tax than they receive in benefits. These figures, shown in Table 2, take account of both indirect taxes (on spending) and non-cash benefits.

The figures based on the 1987 Household Budget Survey have yet to be published by the Central Statistics Office but they are expected to show that the gap between tax and benefits for single child families narrowed somewhat. But households with one or two adults were on average net beneficiaries while couples with one or three children were net losers.

So again there is no evidence that policies are geared to favouring the family with children. But it must be stressed that these figures are averages and can be distorted by a range of factors.

TAXATION

•MARITAL STATUS AND INCOME TAX LIABILITY.

The income tax code discriminates in favour of married couples in so far as such a couple can elect to have their income assessed for tax jointly. In the first instance each person is individually assessed for tax but by electing to be assessed jointly, a married couple can ensure the optimal use of their allowances and lower rate tax bands.

Their total income tax liability can not be any higher under joint assessment than it would be if they were taxed individually. All it can do is reduce the overall tax liability and, in some cases they end up paying significantly less tax. A married couple have double the tax allowances and double the lower rate tax band of a single individual. So if only one of them is earning he or she can make use of the double allowances and double tax band against that single income.

So there is a clear advantage is opting for joint assessment where there is only one income. There can also be an advantage where one spouse has a higher income than the other. In such a situation, were they taxed individually one might only be liable for tax at 27p and the other at 48p. Under joint assessment the one spouse’s unused 27p tax band can be passed onto the other.

But the right to opt for joint assessment is limited. It is only available to married couples. This includes separated couples and it is proposed to extend the right to divorced couples if divorce is introduced. But the right is not available to cohabiting couples and, of course, widowed persons and other lone parents do not enjoy the same tax concessions as married couples.

•LONE PARENTS:

All lone parents enjoy the same tax allowances as a married couple who opt for joint assessment. In the current year their personal allowances amount to £5,000 which is the same as the married allowance and twice the single allowance.

A widowed person with children has a personal allowance of £3,000 plus a lone parent’s allowance of £2,000 making up the total of £5,000. (the special bereavement allowance which lasts for three years is considered below). Other lone parents have the normal single person’s personal allowance of £2,500 and a slightly higher single parent’s allowance of £2,500 also making up a total of £5,000.

Tax Allowances

	Personal	Lone parent	Total
Married couple	£5,000		£5,000
Widowed	£3,000	£2,000	£5,000
Other lone parent	£2,500	£2,500	£5,000

But while all lone parents enjoy the same personal tax allowances as married couples they are disadvantaged in so far as they are only granted a single person’s lower tax band. A married couple pays tax at 27p on the first £17,800 of taxable income before going into the 48p tax bracket. The lone parent or widowed taxpayer goes into the 48p tax bracket after £8,900 of taxable income.

Tax Bands

	27p	48p
Married couples	£17,800	Remainder
Widowed	£8,900	Remainder
Other lone parents	£8,900	Remainder

This can affect someone with an income in excess of £14,840 if they can claim only the basic tax allowances i.e. personal, PAYE and PRSI. Above that and they are paying more tax than a married couple with similar income.

During the first three years after bereavement a widowed person with a dependent child or children enjoys extra tax allowances which can help offset the adverse impact of the tax band difference. The tax allowance is £1,500 in the first year; £1,000 in the second year; and £500 in the third year. But even in the first year it is not enough to offset the tax band difference for those with incomes of more than £18,000.

Tables 3, 4 and 5, provide examples of the impact of tax these differences have on tax liabilities. In all cases the examples assume a single gross income of £20,000 a year i.e. only one spouse of a couple is wage-earning; couples have at least one child; basic tax allowances.

In summary the tax liabilities are as follows. The full calculation are in Tables 3, 3a, 3b, 3c.

TAX LIABILITY AT VARIOUS INCOME LEVELS

Gross Pay	Married	Cohabiting	Single	Single parent	Widowed
£12,340⁶	£1,728	£2,403	£2,403	£1,728	£1,728
£14,840	£2,403	£3,603	£3,603	£2,403	£2,403
£20,000	£3,796	£6,080	£6,080	£4,880	£4,880
£30,000	£6,496	£10,880	£10,880	£9,680	£9,680

TAX AS PERCENTAGE OF MARRIED COUPLE’S LIABILITY

Gross Pay	Married	Cohabiting	Single	Single parent	Widowed
£12,340	100%	139%	139%	100%	100%
£14,840	100%	150%	150%	100%	100%
£20,000	100%	160%	160%	126%	126%
£30,000	100%	167%	167%	149%	149%

Up to an income of £12,340 the difference in tax liability are due solely to the impact of difference allowances. The married couple, single parents and widowed persons have personal allowances of £5,000 while the cohabiting couple and the single person have personal allowances of only £2,500.

So above £12,340 the cohabiting couple and the single taxpayer start paying tax at 48p in the £ and the difference between tax liabilities widens. At an income level of £14,840 the gap has widened to 50% and at that level the lone parents move into the 48p tax band.

⁶ FIS may well be payable

At an income level of £30,000 the Married Couple is paying 67% less tax than a single taxpayer or a cohabiting couple and almost 50% less than a widowed taxpayer or single parent..

All the examples assume a single income. Even if lone parents have two jobs they can’t claim double standard rate tax bands. A cohabiting couple, of course can if both are employed. Their situation is looked in the next subsection.

Table 5 looks at the special impact of the special tax allowance for widowed person’s in the first three years after bereavement. While the extra £1,500 tax allowance in the first year looks generous, the tax liability for the widowed person remains higher than for the married couples. The tax liability on a single income of £20,000 works out as follows: The full calculations are shown in Table 5.

Year after bereavement	Tax Liability
First	£4,160
Second	£4,400
Third	£4,640
Fourth onwards	£4,880

The liability of other taxpayers is as follows:

Married	£3,796
Single	£6,080
Lone Parent	£4,880
Cohabiting Couple	£6,080

So even in the first year after bereavement the widowed person pays 9% more tax than the married couple. The following year the tax liability is 16% higher; in the third year it is 22% higher and from year four onwards it is 29% higher.

As mentioned above all of these figures are based on a single income but a married couple with two incomes would have the same basic tax allowances. If the joint incomes were £20,000 from employment they would pay slightly less tax than on a single income of £20,000 because they would benefit from an extra PAYE and perhaps PRSI allowance.

It is a subjective judgement as to whether single parents, including widowed persons, should enjoy the same tax concessions as married couples. At present they don’t.

While the only child tax allowances relate to incapacitated children, the tax system is clearly geared to reduce the tax burden of lone parents with dependent children and that helps to bridge the difference between such families and married couples. But there is no difference in the treatment of married couples who have children as opposed to those who haven’t.

The present system is the result of gradual change over the years, some in response to Court judgements. It does not form a logical whole. It makes no distinction between married couples with children and those without. But it does provides extra allowances for lone parents thereby creating a distinction between single people with children and those without, and between widowed persons with children and those without.

It must be questioned why the concessions to lone parents stops short of giving them exactly the same concessions as a married couple. There is already a special recognition that widowed persons can face particular financial difficulties after their bereavement. They may have entered into commitments on the basis of expected tax concessions i.e. mortgage interest relief but are faced with a difference regime. Tax liability can rise sharply at the same time as the costs of keeping a family together have also risen. The three year post bereavement allowance is some recognition but it is limited. Extending the same double tax bands to all lone parents (including widowed persons) with dependent children would cost the exchequer £7 million in a full year. The cost would be a higher £18 million if it were extended to all lone parents and widowed persons whether they had dependent children or not.

Widowed persons are also discriminated against in the application of income tax exemption limits. These are limits of income below which an individual or couple are exempt from income tax and widowed persons are subject to the same limits as single people. The limits are designed to reduce the tax burden on the lower paid, a category which is bound to include significant numbers of lone parents and widowed persons. To extend the married persons’ exemption limits to all lone parents and widowed persons would cost £13.5 million a year.

It has been suggested that some recognition should be taken in both the tax and social welfare system of the different costs of maintaining children at different ages. A study on the cost of rearing children⁷ put the weekly costs as follows for different age groupings in 1992:

	Weekly Cost
Age 0-6	£20.70
Age 7-12	£28.50
Age 13-18	£37.40

These costs were examined by the Child Benefit Review Committee which reported to the Minister for Social Welfare in January 1995 in considering whether Child Benefit rates should be varied by age. They pointed out that while an argument could be made for higher payments for older children to offset their higher direct costs, these may be to some extend offset by the indirect costs associated with younger children including child minding. So the case for varying tax reliefs for difference age levels is far from clear cut.

The case for providing some tax concession for child care has been made on various levels. At one level the case is to give some recognition of the cost to the family of child care if both spouses are to earn or if a lone parent is to have a job. At another level the case is made that a parent employing a child minder is actually creating a job and should not have to pay wages out of income which has already been taxed.

While such tax relief has been sought by the National Women’s Council of Ireland there has been no exposition of how it might operate. Would it be available to all parents with children below a certain age, or would it only be allowed to people who actually employed child minders? Would it be a flat relief or would it be allowed against actual expenditure on child minding?

⁷ “The Cost of a Child” by the Family Studies Centre UCD published by the Combat Poverty Agency

A global relief to all parents would be the easiest to administer, but it would in essence, be no different from a child tax allowance. This would run counter to the long established movement towards targetting State aid to children thought the Social Welfare System. Indeed, the whole question could be considered as part of the general movement towards some form of basic income for children. The current movement, outlined later, is toward providing direct payments through the Child Benefit scheme.

A specific tax relief would be much more difficult to administer and be open to the criticism that it discriminated against the parent or parents who did their own child minding. There would have to be anti-abuse measures built in to ensure that child-minding costs which were claimed were actually incurred. Would it be permissible to pay another family member, a child for instance who might be outside the tax year and not eligible for social welfare payments.

The cost to the exchequer would depend on the type of relief introduced but it could be substantial.

There is already some tax relief for child care built into the system. Where an employer provides child care facilities for the use of employees, the value of the facility is not taxed as a benefit-in-kind. In effect it can be tax-free remuneration.

⁸Income Distribution within Irish Households, D Rottman, Combat Poverty Agency, 1994

Any conclusion with regard to tax relief in respect of child care would require a deeper study to ensure the most effective targetting of resources.

•COHABITING COUPLES

The tax system defines marriage in a narrow way. Cohabiting couples are not recognised as married and are therefore they are not eligible for those tax concessions geared to married couples. This includes the income tax allowances mentioned above but also Capital Acquisitions Tax exemptions. Transfers of assets between spouses are exempt from capital acquisitions tax. Transfers between cohabiting couples are treated as transfers between non-relatives and can be very heavily taxed.

Income tax:

For income tax purposes cohabiting couples are treated as two single individuals. By living together they are officially precluded from even claiming a single parent’s allowance. If both are earning their income tax liability may be no higher than that of a similar married couple. But if only one is earning the tax liability could be significantly higher since the married couple would benefit from both the higher married personal allowances and the wider standard rate tax bands.

The following table summarises the position. They show the tax liabilities of married and cohabiting couples at various income levels. Where there is only one income the difference can be very significant. Where both individuals are earning the difference in tax liability between cohabiting and married couples depends mainly on crucially on how their joint income is split.

If they are both on the same income their joint tax liability will be the same as that of a married couple. Where one is earning more than the other the married couple can still make use of double 27p bands but the cohabiting couple can not switch and unused 27p band from low earner to high earner so where one of them is not using his or her 27p band to the full and the other partner is paying tax at 48p, they can end up paying more tax than a married couple. The detailed calculations are in Tables 4, 4a, 4b, 4c, and 4d.

TAX LIABILITY OF MARRIED AND COHABITING COUPLES

	Married	%	Cohabiting	%
One income £20,000	£3,796	100%	£6,080	160%
One Income £30,000	£7,360	100%	£10,880	149%
Two Income £25,000 and £5,000	£7,360	100%	£8,901	121%
Two income £20,000 and £10,000	£7,360	100%	£7,851	107%
Two Income £15,000 and £15,000	£7,360	100%	£7,360	100%

So on a single income of £20,000 the cohabiting couple pays 60% more tax than a married couple. With two income couples the gap is narrower or non-existent.

In the past it was possible for cohabiting couples with one income to reduce their tax liabilities if the earner paid money under covenant to the non-earner. But the scope for this was severely limited in the 1995 budget and will be eliminated altogether from April 1996. A special concession has been made for the tax saving to continue on covenants which were in place prior to 1993 but not on new covenants with the exception of those between legally separated couples.

There is currently no provision in the proposals for divorce legislation to extend the married couple exemptions to cohabiting couples. It is proposed that a person who remarried, of course, would be entitled to claim the normal married tax allowances but it could be viewed as anomalous if a cohabiting couple, who choose not to marry, continued to be refused the same tax allowances and tax bands as a married couple.

Such a tax discrimination against the second relationship could be justified on the basis that it was not a legally recognised family. There would be no formal or legal committment between the partners. A counter argument could be made that in such a case the tax system would discriminate in favour of the person who opted for a formal divorce and against an individual who, for one reason or another, did not wish to divorce his or her spouse but did want to enter a second relationship.

Capital Taxes:

In the case of divorce it is proposed that the first spouse would lose the married person’s capital tax concessions after the initial settlement was made. But in the case of a separation the first spouse may give up succession rights under a deed of separation. The divorce proposals do envisage certain of the entitlements of married couples remaining to both spouses after a divorce. It is proposed that a divorced couples could still opt for joint assessment and, of course, certain social welfare entitlements remain, as if the couple were still married.

Cohabiting couples are at a severe disadvantage with regard to inheritance tax. It is not uncommon for a cohabiting couple to jointly own a house. If it is valued at £100,000 each has assets worth £50,000. If one dies leaving that half of a house to the other, the tax liability would be £10,436. That is assuming, of course, that there are no additional assets such as the proceeds of an insurance policy.

Only the first £11,880 of transfers between non-relatives is exempt from tax. The first £10,000 above that is taxed at 20%; the next £40,000 at 30%; the next £50,000 at 35% and the balance at 40%.

•INCOME TAX EXEMPTION LIMITS

Apart from discriminating against some family groupings the tax system can give rise to poverty traps which impinge on people in family units. In the worst cases attempts to increase the family income are thwarted by a claw back of benefits of greater value than the increase in income. The net result is that the family is worse off.

One such poverty trap arises from the interaction of the application of income tax exemption limits with Family Income Supplement. Other poverty traps are considered in the social welfare section below.

Income tax exemption limits seemed to have been be originally introduced primarily to take pensioners out of the tax-net altogether. Exemption limits were introduced for those aged under 65 on low incomes from 1977 and were extended to all taxpayers from 1980. The scheme was not intended to apply to low income earners. Those with incomes just above the limit faced a marginal tax rate of 60% so that a wage earner on low pay could be paying tax at 60p in the pound on overtime earnings in addition to PRSI contributions.

This wasn’t a major problem since the thresholds were low and the numbers involved small. But from 1990 onwards the thresholds were increased significantly for families by the introduction of increases for each dependent child. In that first year the exemption limit was increased by £300 for each dependent child. In the current year the increase is £450 in the case of the first and second child and £650 for each additional child. That’s on top of the basic exemption limit of £7,400 for a married couple both of whom are under age 65.

So the tax exemption limit for a married couple with four dependent children this year is £9,600. The marginal tax rate on amounts over that is now 40%. In this case that 40% tax rate would apply on incomes up to almost £17,500 — see table 6.

It is ironic that the income tax exemption limits which are aimed at reducing the tax burden on the lower paid give rise to these anomalies. A more serious anomaly arises from the interaction of the exemption limits with Family Income Supplement. It is considered in the Social Welfare Section below.

•OTHER TAX AREAS

In a range of areas the tax system specifically excludes family members from the benefit of some tax concession. Such exclusions are aimed at preventing abuse of the system which could arise from the collusion of two family members. For example the PAYE tax allowance was for many years denied to the children of an employer and is still denied to a spouse. In some cases the desire to prevent abuse may discriminate against family members engaged in legitimate activities not prompted solely by a desire to avoid tax.

There are a wide range of such measures in the tax code. The following is just one example.

Farm Leasing:

A farmer aged 55 years or over, or who is permanently incapacitated who leases his farm for a period of five years or more is entitled to tax relief on the leasing income. In the case of a five or six year lease, up to £3,000 a year of lease income can be received tax free. That is increased to £4,000 in the case of leases running for seven years or more. The leasing income of a married couple are treated separately even if they are taxed jointly so the concession is doubly valuable where husband and wife both own land.

The concession is clearly aimed at encouraging a transfer of land to younger farmers and it adds greatly to the attractiveness of the Farm Retirement Scheme which has the same objective. But the tax relief is withdrawn if the land is leased to a relative.

This seems unnecessary as an anti abuse measure since the other conditions include a requirement that the lease be in writing and be at arms length at full market value. There is also a condition that the lessee must use the land for farming.

Agricultural concession on inheritance tax.

Valuable tax concessions are provided which reduce the taxable value of farmland and assets passing by way of gift or inheritance to a farmer. To be eligible, 80% or more of the recipient’s gross assets must, after the transfer, be comprised of farm assets. “Gross assets” include the value of the recipient’s principal residence and does not take account of debts.

Someone expecting an inheritance can arrange to fall within the 80% rule. He or she may pass ownership of assets to a spouse. Alternatively a person drawing up a will can arrange a period of grace after his or her death before the ownership of the estate passes to a recipient.

The net result can be simply a distortion in the ownership of family assets with no net gain to the exchequer. Those unfortunate enough not to have expected the inheritance or not to have had the benefit of good advice in advance may lose the concession. From a family point of view the prime concern must be with the principal residence and the pressure this requirement can create to change the ownership. It’s a pressure which shouldn’t exist.

Tax Concessions in Year of Marriage

Following the introduction of income splitting in 1980 couples benefited from special tax concessions in the year or marriage. That situation was viewed as anomalous by the Commission on Taxation and in 1983 the then Minister of Finance, Alan Dukes accepted its recommendation. Since then couples have been treated as two single individuals in the year of marriage with a right to elect to be elect for joint assessment for the months following the marriage. The tax saving was put at £8 million in a full year.

SOCIAL WELFARE

The Social Welfare System, defined widely to include Community Employment Schemes and FÁS schemes, supports families in three distinct ways:

1.It provides basic income through global payments such as child benefit; insurance type benefits based on PRSI contributions; and means tested payments to those in need.

2.It supplements the income of those on low pay. In some cases the pay is disregarded in deciding entitlement to a benefit, while the Family Income Supplement Scheme provides an additional payment to families on low pay.

3.It assists unemployed people to rejoin the workforce by promoting Community Employment Schemes and providing training opportunities.

The purpose of this report is to examine areas where such schemes may discriminate against the family. Examples of such discrimination are situations where a couple are entitled to a smaller benefit than two individuals in similar circumstances; the existence of poverty traps where increases in income are offset by an even greater claw-back of benefits or a combination of tax and benefit loss; payments conditions which provide an incentive to people to leave the family home in order to get higher payments.

What follows is an analysis of examples of such anomalies.

•CHILD BENEFITS

“State support for the incomes of families with children aims to achieve a balance between sometimes competing objectives. These include: poverty alleviation — through the provision of income support to low-income households with children; sharing the costs of children across the community and across the life-cycle — through provision of a universal child benefit to all families with dependent children; and the maintenance of work incentives — by ensuring that families with children will gain from employment and from increased earnings.”

This quote from a recent study⁹ highlights the conflicting objectives of State support programmes for children. The bulk of direct expenditure goes on two broad schemes — Child Dependent Additions to social welfare payments and the global Child Benefit to which all families with children are entitled. Benefits are also paid through the Family Income Supplement (FIS) scheme

The cost to the exchequer of these three schemes in 1994 was as follows:

Child Benefit	£265 million
Child Dependent Additions	£280 million (Estimated)
Family Income Supplement	£21 million

Child Dependent Additions and Family Income Supplement are clearly focused on those in need since the recipients are either on social welfare or meet the low income conditions applicable to FIS. Child Benefit is not focused in that it is paid to all families with children irrespective of income or need.

Change — proposals and developments:

The need for a restructuring of the schemes for supporting family income has long been recognised. Differing views are presented depending on the weights given to the conflicting objectives of alleviating poverty; spreading the cost of rearing children more equitably across society; and removing any disincentives to work.

A seminal work on the family by Finola Kennedy¹⁰ published in 1989 highlighted the complex nature of the problem examining the anomalies creating by the system as it then existed and the basic assumptions and objectives which would inform proposals for change.

⁹ Supplementing Family Income, Tim Callan, Ciarán J. O’Neill and Cathal O’Donoghue, ERSI January 1995.

¹⁰ Family, Economy and Government in Ireland, Finola Kennedy, ESRI, January 1989

•One of Dr. Kennedy’s recommendations was the establishment of a “Family Affairs Unit in the Department of Finance with a brief to coordinate policy and expenditure programmes regarding the family and to devise new approaches as required. Such a unit would include representatives of the Departments of Justice, Education, Health, Labour, Social Welfare and other relevant Departments. The unit would be more than an interdepartmental committee or a Commission of Enquiry; it would be a strategic planning unit. It would not seek a policy blueprint in relation to the family, but would seek to build on the considerable structure already in place, undertaking reconstruction, where necessary.” This suggestion clearly still has merit.

The effect of child additions to social welfare payments on the incentive to work is a particular problem which is often highlighted. It arises from the fact that social welfare benefits are related to the number of children in the family while wages seldom are. The social welfare benefits of a large family may, as a result, exceed what is available from low paid employment.

Early proposals envisaged the abolition of Child Dependent Additions to social welfare payments and a compensatory increase in the Child Benefit paid to all families. The cost would be heavy but could be partially offset by taxing Child Benefit. This was the option prefered in a 1990 NESC report.¹¹

¹¹A Strategy for the Nineties, National Economic and Social Council, 1990.

Proposals to tax Child Benefit in the past has run into heavy political opposition partly because in many cases the payments go directly to non-wage earning stay-at-home spouses.

The idea of a basic income for all children was examined in another ERSI report¹² published in 1994 as part of a general study of basic income schemes. The same team zoned in on family income in a more recent report¹³ examining a number of options.

It looked at three options with regard to child income support.

1.A basic income for children

2.An integrated child benefit i.e. taxable, and

3.Child Benefit Supplement as proposed in the programme for Government.

Providing all children with a basic income of about £80 per month, which is roughly the average payment to social welfare recipients at present including Child Benefit would cost the exchequer as estimated £400 million a year. That is after allowing for the fact that the Child Dependent Additions would be abolished. Families on social welfare would be no better off except for the fact that they would keep the payments if they became employed. Those not on social welfare would enjoy higher payments.

Bringing child benefit payments into the tax net as income of the parents would provide the exchequer with a claw-back reducing the cost to an estimated £220 million. But higher income recipients would still gain since all of the additional benefits would not be clawed back in tax. It has been suggested that there could be legal difficulties in applying such a tax on income which could be taken to be the child’s.

¹²Analysis of Basic Income Schemes for Ireland, Tim Callan, Cathal O’Donoghue and Ciarán O’Neill, ESRI, September 1994

¹³Supplementing Family Income, Tim Callan, Ciarán J. O’Neill and Cathal O’Donoghue, January 1995.

A special Committee chaired by Donal Nevin¹⁴ is currently considering the whole question of the integration between the social welfare and tax systems. It is due to issue a final report early in 1996 but has made an interim pre-budget submission.

In October 1994 the then Minister for Social Welfare, Dr. Michael Woods established The Child Benefit Review Committee with a brief to report before the 1995 budget. The Committee, chaired by Dr. Finola Kennedy actually reported¹⁵ after the new Government had issued its programme which contained a committment with regard to Child Benefit. It did not, however, considered the proposed changes in any detail.

The Committee’s main brief was to make proposals for implementation in the 1995 budget but among its conclusions were the following:

“Having considered the targeting of Child Benefit via an income text or taxation, the Committee refrained from recommending either course for Budget 1995 but, on balance, it concluded that were targeting to be introduced, taxation had advantages over income testing although difficult redistributive and legislative issues would arise.

“Extending Child Benefit to 18 to 21 year olds in full time education was considered to be regressive and not recommended. However extending eligibility to all 16-18 year olds who were not in full time employment or apprenticeships was recommended. It was estimated that the cost would be very small.”

The programme for government agreed in December 1994 by the present Government entitled “A Government of Renewal” outlined the following proposal.

“We will work towards a basic income system for children by systematic improvements in Child Benefit, and the creation of a Child Benefit Supplement payable to all social welfare recipients and to low and middle income families.

¹⁴Expert Group on the Integration of Tax and Social Welfare, established in 1993

¹⁵Child Benefit Review Committee Report to the Minister for Social Welfare, January 1995

“The Child Benefit Supplement will eliminate some of the worst poverty and unemployment traps in the tax and social welfare systems.

“It will replace Child Dependent Allowances currently payable to social welfare recipients and Family Income Supplement which is currently payable to very low income families.”

What is intended, it seems, is that Child Benefit would continue to be paid to all families with children. Child Dependent Additions to social welfare payments and Family Income Supplement would be abolished and replaced with a new payment Child Benefit Supplement which would be paid to all social welfare recipients with child dependents and also to families with incomes below a set level.

The more recent ERSI report looks at the forms which such a supplement might take. It pinpointed the following decision variables:

1.What is to be the amount of the supplement?

2.At what income level will withdrawal of the supplement begin and at what rate will it be withdrawn?

3.Is FIS to be wholly abolished, or would it have a residual role?

4.How will the supplement interact with the tax system?

5.Who will be eligible for the supplement?

Having examined these factors the report concludes that a change to a taxable Child Benefit or a change to a Child Benefit Supplement offers scope for significant improvements over the current system.

“The balance of advantages between these two broad approaches depends not only on the weight attached to different objectives, but on the details of implementation, which deserve further investigation.”

•FAMILY INCOME SUPPLEMENT

As outlined above the Family Income Supplement forms one relatively small element of the States’ income support programme for families. It is a supplement paid to families on low earned income. The earner, who must have dependent children, has to be working at least 20 hours a week.

The payments are calculated on the basis of 60% of the gap between the family’s actual gross income and an income limit laid down in the scheme. The income limits vary with the number of children in the family.

For instance in the current year the income limit for a family with four children is £245 a week. If such a family actually had an income of £145 a week they could claim £60 i.e. 60% of the difference between £145 and £245.

The system can be seen as child income support as payments are only made to families with children. The proposal for Child Benefit Supplement in the programme for government envisages its abolition but it is not clear whether it is intended to phase it out.

As currently operated it gives rise to a definite poverty trap. In addition a low take-up rate of no more than 50%¹⁶ gives cause for concern with regard to information flows on social welfare schemes in general.

The poverty trap arises from the interaction of FIS with the tax system. A married couple with four children enters the income tax net at £9,600 a year or £185 a week. That is their tax exemption limit. At £185 a week they are still eligible for FIS payments of £36 (60% of the difference between £245 and £185).¹⁷

¹⁶ESRI 1995

For each pound by which earnings exceed £185 there is lose of 60p FIS and income tax liability of 40p. So additional earnings result in an equal loss in terms of tax and FIS. In addition there may be a liability to PRSI. An easy solution would be to base eligibility on net income rather than gross income. It has been estimated that this change on its own would cost the Exchequer between £16 and £20 million a year.

While FIS payments do not affect eligibility for medical cards they are taken into account in deciding other social welfare entitlements such as Supplementary Welfare rent or mortgage interest payments. This is another aspect of the poverty trap.

Family Income Supplement is an unusual social welfare benefit. Most benefits go to people who are out of work for one reason or another - unemployment, disability, or retirement. It is well known that benefits are available to people out of work. But FIS is payable to people in employment albeit low paid employment. And it has to be claimed.

ERSI studies suggest that the take-up of FIS payments among eligible families was as low as 25% in 1987 while, as mentioned earlier, it is currently estimated that the take-up is less than 50%.

While the Department of Social Welfare has not been actively advertising its availability in recent times -- possibly in anticipation of its phasing out -- they have in the past publicised the scheme with paid advertisements and through other channels.

¹⁷Changes proposed in the 1996 budget to FIS thresholds and income tax exemption limits will shift the poverty trap but will not remove it. A married couple with four children will, from April 1996, enter the tas net at £10,000 a year, £192 a week. At that income level they will be eligible for FIS payments of almost £38 under the new threshold which will take effect in June. All the FIS thresholds are being raised by £10 a week.

On the basis of a survey of social welfare recipients The Irish National Organisation of the Unemployed concluded that people on social welfare payments do not have enough accurate information to make realistic informed decisions about whether or not to take up job offers or work scheme offers. People appear to have more information about the negative implications of taking up work than the potential positive help available to them.”

“Those interviewed” the survey report adds “were suspicious and mistrustful of the Department of Social Welfare. People reported making a conscious decision not to ask for information when signing on particularly about returning to employment options. People felt vulnerable and felt that their payment could be threatened if they enquired about a job option and then did not take it up.”

•SECONDARY BENEFITS

Apart from poverty traps which arise from the claw back of income tax or direct social welfare payments, there is a major problem relating to the loss of secondary benefits such as medical cards. For many families, indeed, the medical card is of major importance and its potential loss gives rise to major concern.

On average, families with medical cards make 7.3 visits to their GP every year and get 6.5 prescriptions. (See table 7). But those average figures understate the full benefit of a medical card to some families. Figures derived from the 1987 Household Budget Survey put the weekly value of medical services to unemployed families at £22.53. The weekly value to families whose head is a manual worker was estimated at £21.33 while it was valued at £25 for those whose weekly income fell below £50 a week in 1987. Medical card holders are also automatically entitled to free school transport -- a major consideration for many families particularly in rural areas.

The problem is particularly acute with medical cards since, as they are currently operated, a person either has one or hasn’t got one. There is currently no means of phasing out the benefits attached to a medical card. There are income guidelines operated by the Health Boards which issue the cards but they are said to have no statutory effect. The official view is “that a medical card may be awarded to a person whose income exceeds the relevant guidelines if, in the opinion of the Chief Executive Office, undue hardship would otherwise result.”

There are no guidelines as to how that discretion should be operated and the agreed procedures indicate that the income guidelines are taken seriously with employees being required to supply an P60 form and an employer’s signature on a statement of income.

There is less certainty with regard to the guidelines in their application to farmers who do not prepare accounts. Their means are assessed on the basis of “the standard notional system based on the Teagasc guidelines”. In applying these guidelines the health boards “will take account of the advice of Teagasc as to the allowance to be made for local variations in agricultural conditions. Regard may also be had to the land letting value prevailing in the area.”.

The Teagasc guidelines are not readily available. The Department of Health claims not to have them. They were obtained from a Health Board and found to be very basic and based on Teagasc figures over two year’s old (Table 9.)

There is clearly more room in this context for discretion with regard to such farmers then there is with people in employment. But it is people taking up employment who face the possible disincentive of losing a medical card.

•Details of all the guidelines used in considering medical card entitlement should be made readily available.

There is some evidence that the guidelines are applied differently by different health boards. For instance in December 1994 some 50.32% of the population in the North Western Health Board area had medical cards while only 29.77% of the population in the Eastern Health Board area had cards. See table 7.

There is also some evidence that the discretion is exercised in different ways at different times with perhaps occasional purges on medical card holders. For instance during 1994 (Between December 1993 and December 1994) the number of medical card holders in Longford fell from 15,119 to 13,360 — from almost 50% of the population to just over 44%.

The Department of Health says that “the Chief Executive Officers of the health boards have agreed on a number of standardised procedures to ensure uniformity and consistency in all areas when the income of a medical card applicant is being assessed.” Details are not made available.

The Department says that differences in the percentage of persons holding medical cards in different health board areas are accounted for mainly by differences in population structure. It explains the sharp reduction in medical card holders in Longford in 1993 as due to changes in the eligibility of third level students. Yet, a similar reduction did not take place throughout the country and a health board official believed the reduction to be due to the fact that a backlog of reviews had been cleared during that period.

Some social welfare payments are excluded from the medical card means test calculation. These include Family Income Supplement, Community Employment payments, Back to Work Allowance and long-term unemployed persons participating in recognised educational or training programmes. Such people retain the medical card for a period of two years This eases the poverty trap element of Family Income Supplement and removes the disincentive effect with regard to the Back to Work Allowance and participation on Community Employment Schemes.

But the problem still remains for those given the option to take up employment without resource to the Back to Work Allowance. One important category facing such options would be the wives of unemployed men offered part-time employment. It is often the case that women have a better chance of getting part-time work than men. But there may be a disincentive to take it up because of the potential loss of the medical card.

• Because of the importance attached by many families to the medical card, and the undoubted real value it has, there is a clear case for introducing some method of phasing out its benefits as a family’s income rises. This could be achieved by introducing a time delay in losing the entitlement, or by phasing benefits out on a percentage basis, or by easing the strict application of income guidelines. Already long-term unemployed people taking up Community Employment Schemes etc. are entitled to retain their cards for two years. A similar concession could be extended to people whose incomes rise as a result of either themselves or their spouses taking up work. Such a concession could, at least, apply to the children of such couples.

The Department of Health is opposed to any eligibility system based on income because of the administrative costs involved. What is suggested above is a phasing out on a time basis.

•SUPPLEMENTARY WELFARE

Supplementary Welfare is administered by the Health Boards for the Department of Social Welfare. In addition to providing a statutory right to a basic income the scheme provides for further discretionary payments either as weekly supplements or as exceptional need payments. These extra payments include supplements to help recipients of social or supplementary welfare to meet their rent or mortgage interest bills. Both are strictly means tested.

In both cases the recipient is required to make a contribution of at least £6 together with any income which they have in excess of basic Supplementary Welfare Supplement. In other words the recipient is left with a disposable income which is £6 less than the relevant Supplementary Welfare Supplement.

For instance a couple with two children receiving £126.40 unemployment assistance have to contribute £8.10 towards the rent. Their income is £2.10 above the £124.30 which would be their Supplementary Welfare entitlement. So they have to contribute that towards the rent together with an additional £6.

The calculation is the same for Mortgage Interest Supplement but the benefit covers only the interest and house insurance part of the mortgage repayment.

By definition those receiving Rent Allowances or Mortgage Interest Supplement have disposable incomes £6 a week below the Supplementary Welfare payment applicable to their circumstances. They are far from well off and are also in a poverty trap in so far as each £1 increase in income results in a £1 reduction in the rent or mortgage payment.

There are exceptions to this claw back. It doesn’t apply to previously unemployed persons on the Third Level Education Allowance or the Vocational Training Opportunities Schemes; people on Back to Work Allowance, Community Employment or Area Allowances. People in these latter schemes contribute a maximum of £8.10 towards the rent or mortgage payment provided the gross household income does not exceed £250 a week. There is another rule that for those on Community Employment Schemes the maximum rent or mortgage payments allowed is £250 a month.

There is a clear poverty trap for many people receiving Rent or Mortgage Interest Supplements, but similar traps affect many recipients of social assistance i.e. unemployment assistance or non-contributory pensions.

The vast majority -- 66% -- of recipients of Rent Allowance have no dependents.¹⁸ But the benefit is an important source of income for a significant number of families. About 21% of recipients are lone parents with child dependents only. On the basis of figures for the actual number of cases in 1994 that 21% represents over 14,000 claimants.

In 1994 a total of £44.9 million was paid out in Rent Allowances in respect of 67,616 claimants. (Table 8).

•RENT ALLOWANCES

There is a widely held view that the availability of Rent Allowance may encourage young people to leave the family home. While it must be a factor in any decision by a young person to leave home, there are obviously many other factors including the availability of higher social welfare payments.

¹⁸Department of Social Welfare, internal sample survey 1995.

Supplementary Welfare payments are available to anyone over 16 years of age. But the number of recipients of Rent Allowance under 20 years of age is still relatively small although there is evidence that it is growing.

There was a sharp 50% increase in the proportion of Rent Allowance recipients under age 20 between September 1993 and October 1994 when the Department of Social Welfare conducted sample surveys. In October 1994 7.5% of the recipients were under 20 — up from 5% a year earlier. On the basis of the figures for total cases that 7.5% represents about 5,070 cases and the increase from 5% would represent about 1,700 cases.

The breakdown by age of recipient is as follows:

Age	1993	1994
<20	5%	7.5%
20-25	28%	27.5%
26-30	23%	22%
31+	43%	42%
not given	1%	1%

About seven out of ten (71%) of the recipients under 25 are single with no dependents. A little over one-in-five (22%) have child dependents only. Females predominate in the under 20 category accounting for about two out of every three recipients. But the gender balance evens out a bit when the 20 to 25 age grouping is included. In the under 26 grouping females account for 60% and males 40%.

The question of young people leaving home embraces a wider range of factors than Rent Allowances. There are wider issues involved. In the context of this report these include factors such as access to education and training opportunities and the operation of health board guidelines. These are looked at in more detail in the section below.

• REVIEW GROUP

As this report was being concluded a report on Supplementary Welfare Allowances and Housing¹⁹ was presented to the Minister for Social Welfare. It pointed out that Supplementary Welfare Allowances are now a mainstream housing support mechanism operating outside the framework of overall housing policy.

In certain circumstances rent supplements are a cost-effective means of providing housing for people who are unable to meet their housing need from their own resources. This is especially so, the report says, in the case of single people. It is a flexible means of achieving social integration which is in line with the objectives of current housing policy.

But the report draws attention to the fundamental difference which exists between the Supplementary Welfare approach and that adopted by local authorities. Supplementary welfare meets the needs of those deemed by local authorities to have low priority. The Review Group welcomed the commitment in the programme for government that “all forms of social housing assistance will be administered by the local authority.

¹⁹Review Group on the Role of Supplementary Welfare Allowance in Relation to Housing — report to the Minister for Social Welfare, December 1995

Social Welfare and Young People

As outlined above there is a view that the provisions of the social welfare system may encourage young people in certain circumstances to leave home. Provision obviously has to be made in the system to provide support for young people who leave home for one reason or another. Once such provisions exist they may appear attractive to some young people. But if they do, then the alternative of staying at home can’t have been too attractive in the first place since the level of support provided by social welfare payments do not provide for a high standard of living.

There may well be push pressures on young people to leave home too since as a child dependent they are worth only £13.20 a week in terms of extra benefits and even over 18 they may be able to claim no more than £25 in unemployment assistance while living at home.

An indication of the number of young people on social welfare who have left family homes to live on their own or with others can be derived from the Rent Allowance statistics. Most people in such a position would be in receipt of Rent Allowance.

On the basis of the Department of Social Welfare survey there are about 5,000 people under the age of 20 in receipt of Supplementary Welfare Rent Allowance. It must be assumed that a large proportion of these had the option of remaining in the family home but if they did have that option, they had to convince their Community Welfare Officer that they had a valid reason for leaving.

Community Welfare Officers are issued with guidelines by which to decide eligibility for Rent Allowance. The guidelines are generally applied to young people and according to the Irish National Organisation for the Unemployed, the practice tends to vary considerably across the country. They are said to be applied vigorously to under 23s in the Eastern Health Board area and to under 25s elsewhere.

These guidelines have not been published. They will be shortly under a new Government policy. They are said to include the following valid reasons for leaving home by the INOU²⁰:

1.Over crowding

2.Improving your chances of finding employment

3.In danger of physical, mental or sexual abuse

4.Alcohol or drug abuse in the family home

5.The general interest of the applicant’s family.

Community Welfare Officers may ask for letters from social workers or gardaí to back up a claim and may be swayed by letters from teachers, priests, community workers, family or friends.

Some concerns have been expressed at the standard of accommodation on which Rent Allowances are paid. It is planned under new legislation already enacted to compile a register of private rented accommodation. This will allow minimum standards to be set.

(The recent Review Group report urged the early implementation of the registration scheme and suggested that in the meanwhile Health Boards should continue to liaise with the appropriate housing authority in relation to individual cases where there are concerns about the standard of accommodation)

²⁰Supplementary Welfare Allowance, INOU, 1995.

•DECIDING FACTORS

A 16 to 18 year old facing difficulty at home may see the option of leaving home attractive. If his or her parents are on social welfare they are receiving about £13.20 a week in child dependent allowance together with either £27 or £32 a month in Child Benefit (depending on the size of the family). That’s a total of either £19.43 or £20.58 a week.

Outside of the home the young person can claim Supplementary Welfare of up to £60.40 a week together with all but £6 of rent payable for accommodation. The parents lose £20 a week but they have one young adult less to provide for.

If the young person is over 18 he or she can claim unemployment assistance in their own right but family means are taken into account while they are living in the family home. The minimum rate of unemployment assistance is now £25 a week but the maximum, where no means are assessed in £60.40. So there can be an improvement in disposable income for the young person leaving home.

Given the other costs of living alone rather than in the family home the actual net gain may be small or non-existent and the general standard of accommodation available to young people is low but the right to disposable income can be attractive to someone unaccustomed to having money to spend.

•EDUCATION AND TRAINING

The social welfare system interacts with various State sponsored training and education programmes. There are programmes to provide support for long-term unemployed people who enter full-time education; FAS courses; and Community Employment Schemes. While the latter are work schemes they contain an element of training.

Young people are precluded from most of these options. There is a view that both FAS and the Department of Education are backing away from the problem of providing training and education for young people in the 16 to 21 age bracket who have dropped out of the formal education system.

Community Employment Schemes are not available to people under 21 years of age. But a child between 18 and 21 who remains in education is defined as a child dependent. If his or her parents are on social welfare they only receive £13.20 (£20 including child benefit) in respect of such a child. Outside of education the “child” can receive a minimum of £25 a week in unemployment assistance. This provides an incentive for some young people over 18 to leave the educational system and sign on as unemployed. But there are few employment opportunities for young people with no educational qualifications from social welfare backgrounds.

IBEC, the employers’ organisation, has suggested a special £1,000 tax allowance for young first time workers aged between 16 and 19 to encourage them to take work at lower gross rates of pay. While conscious of the potential criticism that it is seeking to create a pool of young workers willing to work for lower pay, IBEC believes that such an allowance would recognise reality and create employment opportunities.

DISCRIMINATION

The problem of access to FÁS programmes and Community Employment Schemes is not confined to young people. An increasing number of women are seeking to take up paid employment but are excluded from many State sponsored schemes because they are not on the Live Register. This area was recently explored by the Joint Committee on Women’s Rights but is very relevant to the consideration of the family because the exclusions restrict the ability of many families to increase their incomes and improve their standards of living.

•ADULT DEPENDENTS

While the tax system allows taxpayers to be treated as individuals if they so desire, that’s not always allowed under the social welfare system. For social welfare purpose a spouse or partner is defined as an “adult dependent” and, as such, is entitled to a lower rate of benefit the actual claimant.

The woman is usually the “dependent” although the system allows for either the man or woman to make the actual claim for benefit and designating the other spouse/partner as the “dependent”.

The system is obviously based on some variant of the old adage that “two can live as cheaply as one” which may read that two can survive on less that twice what it takes one to survive on.

Apart altogether from the fact that the notion of “adult dependent” is distasteful to many people, it is anomalous that the social welfare system takes an entirely different approach to the tax system.

A couple living together “as husband and wife” is treated in the same way as a married couple for social welfare purposes. This results in them getting less benefits than they would as two individuals. But a similar couple, who could benefit from being treated as a couple for tax purposes, cannot do so under the tax code.

•The notion of adult dependency should be quickly removed from the social welfare code. This will require a relative increase in the payments for “adult dependents” as currently defined.

•PRSI ENTITLEMENTS FOR CHILD MINDING

THE ELDERLY

While State income support for the elderly has over many years risen faster than both inflation and benefits under other State welfare programmes, the family remains the main provider of care for the elderly. This point was made by Finola Kennedy in her ESRI study on the family²¹. She wrote:

“There is evidence to show that women are the principal carers. In practice ‘community care’ often means care by women, usually female relatives²². It is estimated that 66,300 persons over 65 resident at home require some degree of care. About 77 per cent of these (50,800 persons) are looked after by members of their household. Professional and managerial households are less likely than farm households to care for an elderly person within their own home. It is estimated that 30 per cent of those who are cared for within the home are cared for by a daughter, 16 per cent by a son and 14 per cent by a daughter-in-law. Where care is given by someone outside the household in which the elderly person lives, once again women predominate as carers, and relatives of varying degrees comprise the majority of carers.”

Dr. Kennedy concludes by quoting from an earlier British study which described carers as “The Forgotten Army”.

The role of carers has been recognised to a limited extent in the social welfare and by an even more limited extent in the tax code.

Tax reliefs in this area are minimal and give greater recognition to care outside the home by allowing tax relief on the cost of nursing home care. While the first £200 of a family’s annual expenditure on medical costs is disallowed and there is no upper limit. Medical expenses in this context includes nursing care in a recognised nursing home. So if a dependent relative is in a nursing home tax relief is allowed on the full cost -- less the initial £200 -- but the only allowance available if the person is cared for in the home is the minimal £110 annual allowance for a dependent relative and relief on actual out of pocket medical costs (not including nursing).

²¹Family, Economy and Government in Ireland, Finola Kennedy, January 1989.

²²Caring for the Elderly, National Council for the Aged, 1988.

There is a £5,000 tax allowance available where a carer is employed to look after an incapacitated person. But that relief is only available to the incapacitated person or his or her spouse. While this is a valuable relief to those claiming it, it is limited in scope. It costs the exchequer only £200,000 a year.²³

The Social Welfare Carer’s Allowance provides a maximum of £62.50 a week to an individual caring full time for an incapacitated or elderly person with whom they must be living. It is not payable in addition to another social welfare payment and is strictly means tested. At the end of 1994 there were a total of 5,056 recipients a proportion of whom would have been entitled to another social welfare payment had they not been entitled to this allowance.

To qualify, the carer must not be working outside the home and any income they have over and above £6 a week results in a pound for pound reduction in the Carer’s Allowance. A spouse or partner of the carer can have an income of up to £150 a week without affecting the payments. That disregard was increased from £100 from June 15, 1995.

•State supports for the care of the elderly in the home don’t reflect the real value of the service provided by voluntary carers or the heavy cost which would have to be borne by society if it had to take up the burden directly. Increased State support is undoubtedly warranted on economic criteria alone. Additional studies need to be done in this area to pinpoint where extra resources should most effectively be spent.

²³Source: Revenue Commissioners.

Table 1

Average Family Income Classified By Stage of Family Cycle 1987

	Pre-family	Pre-School	Early School	Pre- Adolescent	Adolescent	Adult	Empty Nest	Retired	All
Total Direct Income	£346.84	£236.40	£216.45	£226.88	£230.26	£290.99	£140.68	£63.46	£204.11
Total State Transfers	£14.01	£33.21	£36.93	£41.17	£46.16	£61.85	£38.66	£71.36	£43.71
Gross Income	£360.85	£269.61	£253.38	£268.05	£276.42	£352.84	£179.34	£134.82	£247.83
Total Direct Tax	£97.92	£55.81	£47.29	£50.74	£51.68	£66.81	£29.62	£8.52	£46.87
Disposable Income	£262.93	£213.80	£206.09	£217.31	£224.74	£286.03	£149.72	£126.30	£200.96
Disposable/direct income ’87	76%	90%	95%	96%	98%	98%	106%	199%	98%
Disposable/direct income ’80	81%	89%	94%	96%	96%	94%	100%	169%	96%

Source: Household Budget Survey, 1987, Volume 1, table 9, Central Statistics Office

Table 2

Impact of Taxes and State Benefits on Households 1980

Household Composition	Cash Benefits	Non-cash Benefits	Total Benefits	Direct Taxes	Indirect Taxes	Total Taxes	Tax/Benefit Ratio	1987
One adult	£10.96	£7.64	£18.60	£8.22	£7.19	£15.41	0.83
Two adults	£16.96	£11.40	£28.36	£15.10	£14.24	£29.34	1.03
Two adults/one child	£4.88	£8.58	£13.46	£21.55	£19.44	£40.99	3.05
Two adults/three children	£9.64	£22.09	£31.73	£19.66	£20.03	£39.69	1.25

Source: Redistributive Effects of State Taxes and Benefits on Household Incomes in 1980 (CSO 1983)

Table 3

Effects of Marital Status on Income Tax Liability

Assumptions: Single gross income of £20,000; basic allowances; couples and widowed person have at least one child.

	Single	Single parent	Married	Widowed	Cohabiting Couple
Gross income	£20,000	£20,000	£20,000	£20,000	£20,000
Personal Allowance	£2,500	£2,500	£5,000	£3,000	£2,500
Single parent’s allowance		£2,500		£2,000
PAYE allowance	£800	£800	£800	£800	£800
PRSI allowance	£140	£140	£140	£140	£140
Taxable Income	£16,560	£14,060	£14,060	£14,060	£16,560
Tax:-
First £8,900 at 27p	£2,403	£2,403		£2,403	£2,403
Remainder at 48p	£3,677	£2,477		£2,477	£3,677

Up to first £17,800 at 27p			£3,796
(Remainder at 48p)

Total Tax	£6,080	£4,880	£3,796	£4,880	£6,080

Table 3a

Effects of Marital Status on Income Tax Liability

Assumptions: Single gross income of £14,840; basic allowances; couples and widowed person have at least one child.

	Single	Lone parent	Married	Widowed	Cohabiting Couple
Gross income	£14,840	£14,840	£14,840	£14,840	£14,840
Personal Allowance	£2,500	£2,500	£5,000	£3,000	£2,500
Single parent’s allowance		£2,500		£2,000
PAYE allowance	£800	£800	£800	£800	£800
PRSI allowance	£140	£140	£140	£140	£140
Taxable Income	£11,400	£8,900	£8,900	£8,900	£11,400
Tax:-
First £8,900 at 27p	£2,403	£2,403		£2,403	£2,403
Remainder at 48p	£1,200	£0		£0	£1,200

Up to first £17,800 at 27p			£2,403
(Remainder at 48p)

Total Tax	£3,603	£2,403	£2,403	£2,403	£3,603

Table 3b

Effects of Marital Status on Income Tax Liability

Assumptions: Single gross income of £12,340; basic allowances; couples and widowed person have at least one child.

	Single	Single parent	Married	Widowed	Cohabiting Couple
Gross income	£12,340	£12,340	£12,340	£12,340	£12,340
Personal Allowance	£2,500	£2,500	£5,000	£3,000	£2,500
Single parent’s allowance		£2,500		£2,000
PAYE allowance	£800	£800	£800	£800	£800
PRSI allowance	£140	£140	£140	£140	£140
Taxable Income	£8,900	£6,400	£6,400	£6,400	£8,900
Tax:-
First £8,900 at 27p	£2,403	£1,728		£1,728	£2,403
Remainder at 48p	£0	£0		£0	£0

Up to first £17,800 at 27p			£1,728
(Remainder at 48p)

Total Tax	£2,403	£1,728	£1,728	£1,728	£2,403

Table 3c

Effects of Marital Status on Income Tax Liability

Assumptions: Single gross income of £30,000; basic allowances; couples and widowed person have at least one child.

	Single	Single parent	Married	Widowed	Cohabiting Couple
Gross income	£30,000	£30,000	£30,000	£30,000	£30,000
Personal Allowance	£2,500	£2,500	£5,000	£3,000	£2,500
Single parent’s allowance		£2,500		£2,000
PAYE allowance	£800	£800	£800	£800	£800
PRSI allowance	£140	£140	£140	£140	£140
Taxable Income	£26,560	£24,060	£24,060	£24,060	£26,560
Tax:-
First £8,900 at 27p	£2,403	£2,403		£2,403	£2,403
(Remainder at 48p)	£8,477	£7,277		£7,277	£8,477

Up to first £17,800 at 27p			£6,496
(Remainder at 48p)

Total Tax	£10,880	£9,680	£6,496	£9,680	£10,880

Table 4

Effects of Marital Status on Income Tax Liability

Assumptions: One income of £20,000, basic allowances, no children.

	Single	Married	Cohabiting Couple

Gross income	£20,000	£20,000	£20,000
Personal Allowance	£2,500	£5,000	£2,500
PAYE allowance	£800	£800	£800
PRSI allowance	£140	£140	£140

Taxable Income	£16,560	£14,060	£16,560
Tax:-
First £8,900 at 27p	£2,403		£2,403
Remainder at 48p	£3,677		£3,677

Up to first £17,800 at 27p		£3,796
(Remainder at 48p)

Total Tax	£6,080	£3,796	£6,080

Table 4a

Effects of Marital Status on Income Tax Liability

(Comparison of married and cohabiting couples)

ASSUMPTIONS: Total income of £30,000 with the married and cohabiting couple sharing that income in the ratio of £20,000 to £10,000; basic tax allowances.

	Single	Married	Two Income Cohabiting Couple

Gross income	£30,000	£30,000	£20,000	£10,000
Personal Allowance	£2,500	£5,000	£2,500	£2,500
PAYE allowance	£800	£1,600	£800	£800
PRSI allowance	£140	£280	£140	£140

Taxable Income	£26,560	£23,120	£16,560	£6,560
Tax:-
First £8,900 at 27p	£2,403		£2,403	£1,771
Remainder at 48p	£8,477		£3,677

Up to first £17,800 at 27p		£4,806
(Remainder at 48p)		£2,554

Total Tax	£10,880	£7,360	£6,080	£1,771
			Combined Liability £7,851

Table 4b

Effects of Marital Status on Income Tax Liability

(Comparison of married and cohabiting couples)

ASSUMPTIONS: Total income of £30,000 with the married and cohabiting couple sharing that income in an equal ratio of £15,000 to £15,000; basic tax allowances.

	Single	Married	Two Income Cohabiting Couple

Gross income	£30,000	£30,000	£16,000	£15,000
Personal Allowance	£2,500	£5,000	£2,500	£2,500
PAYE allowance	£800	£1,600	£800	£800
PRSI allowance	£140	£280	£140	£140

Taxable Income	£26,560	£23,120	£11,560	£11,560
Tax:-
First £8,900 at 27p	£2,403		£2,403	£2,403
Remainder at 48p	£8,477		£1,277	£1,277

Up to first £17,800 at 27p		£4,806
(Remainder at 48p)		£2,554

Total Tax	£10,880	£7,360	£3,680	£3,680
			Combined Liability £7,360

Table 4c

Effects of Marital Status on Income Tax Liability

(Comparison of married and cohabiting couples)

ASSUMPTIONS: Total income of £30,000 with the married and cohabiting couple sharing that income in the ratio of £20,000 to £10,000; basic tax allowances.

	Single	Married	Two Income Cohabiting Couple

Gross income	£30,000	£30,000	£20,000	£10,000
Personal Allowance	£2,500	£5,000	£2,500	£2,500
PAYE allowance	£800	£1,600	£800	£800
PRSI allowance	£140	£280	£140	£140

Taxable Income	£26,560	£23,120	£16,560	£6,560
Tax:-
First £8,900 at 27p	£2,403		£2,403	£1,771
Remainder at 48p	£8,477		£3,677

Up to first £17,800 at 27p		£4,806
(Remainder at 48p)		£2,554

Total Tax	£10,880	£7,360	£6,080	£1,771
			Combined Liability £7,851

Table 4d

Effects of Marital Status on Income Tax Liability

(Comparison of married and cohabiting couples)

ASSUMPTIONS: Total income of £30,000 with the married and cohabiting couple sharing that income in the ratio of £25,000 to £5,000; basic tax allowances.

	Single	Married	Two Income Cohabiting Couple

Gross income	£30,000	£30,000	£25,000	£5,000
Personal Allowance	£2,500	£5,000	£2,500	£2,500
PAYE allowance	£800	£1,600	£800	£800
PRSI allowance	£140	£280	£140	£140

Taxable Income	£26,560	£23,120	£21,560	£1,560
Tax:-
First £8,900 at 27p	£2,403		£2,403	£421
Remainder at 48p	£8,477		£6,077

Up to first £17,800 at 27p		£4,806
(Remainder at 48p)		£2,554

Total Tax	£10,880	£7,360	£8,480	£421
			Combined Liability £8,901

Table 5

Married and Widowed tax liabilities compared

Assumptions: One gross income of £20,000; basic allowances; widowed person has at least one child.

	Married	Widowed	Widowed	Widowed	Widowed
		Year 1	Year 2	Year 3	Year 4 onwards

Gross income	£20,000	£20,000	£20,000	£20,000	£20,000
Personal Allowance	£5,000	£3,000	£3,000	£3,000	£3,000
Single parent’s allowance		£2,000	£2,000	£2,000	£2,000
Widowed allowances*		£1,500	£1,000	£500	£0
PAYE allowance	£800	£800	£800	£800	£800
PRSI allowance	£140	£140	£140	£140	£140

Taxable Income	£14,060	£12,560	£13,060	£13,560	£14,060
Tax:-
First £8,900 at 27p		£2,403	£2,403	£2,403	£2,403
Remainder at 48p		£1,757	£1,997	£2,237	£2,477

Up to first £17,800 at 27p	£3,796
(Remainder at 48p)

Total Tax	£3,796	£4,160	£4,400	£4,640	£4,880

* Special allowances for first three years after bereavement

Table 6

Exemption Limit Cut-Off

Assumptions: Married couple, one earning, with four children giving a tax exemption limit of £9,600

NORMAL TAX CALCULATION		EXEMPTION CALCULATION

Gross income	£17,250	Gross income	£17,250
Personal Allowance	£5,000	Exemption Limit	£9,600
Single parent’s allowance
PAYE allowance	£800
PRSI allowance	£140
Taxable Income	£11,310	Taxable income	£7,650

Tax:-		Tax:-
Up to first £17,800 at 27p	£3,054	Marginal 40% rate	£3,060

Table 7

Eligibility for Medical Cards December 1994

Health Board	% of population	Number
Eastern	29.8	370,734
Midland	40.6	82,386
Mid Western	35.1	108,932
North Eastern	42.9	128,911
North Western	50.3	104,747
South Eastern	39.1	149,722
Southern	34.9	185,568
Western	45.4	155,813

National	36.04	1,286,813

Source: General Medical Service (Payments) Board

Usage of Medical Cards

	Free GP Visits per year	Free Prescriptions per year
Urban Households	6.7	6.1
Farm Households	6.5	5.9
Other Rural Households	9	7.6
All Rural Households	8.3	7.1
State	7.3	6.5

Source: Household Budget Survey 1987

Table 8

Rent Supplement Payments 1994

Health Board	Number of cases	Per 1,000 population	Expenditure (’000)
Eastern	33,445	27	£25,990
Midland	2,381	12	£1,352
Mid Western	5,040	16	£2,250
North Eastern	2,340	8	£1,489
North Western	2,381	11	£1,352
South Eastern	4,249	11	£2,313
Southern	9,518	18	£5,948
Western	8,262	24	£4,193

National	67,616	19	£44,887

Source: Department of Social Welfare, 1991 Census Population Figures

Table 9

Text of guidelines used by Health Boards in assessing farm incomes in the absence of accounts:

May 20, 1993

TEAGASC FARMER’S ASSESSMENT FIGURES

Dairy Cow	£360
Milch Cow	£150
Calves 0 - 12 months	£50
Stores/Heifers/Cattle	£100
Ewes and lambs	£30
Hoggetts	£10
Sows and Bonhams	£100
Pigs (fattened)	£5

TILLAGE

Barley per acre	£60
Wheat per acre	£60
Oats per acre	£60
Wheat per acre	£100

The figures quoted are conservative and unlikely to be contentious. They are net figures and allow for fixed costs i.e. fertiliser, veterinary expenses, interest on working capital, machinery etc. They do not allow for capital expenditure i.e. building, letting etc. It will be noted that there is a substantial increase since the last figures were issued and this reflects a general improvement in farming and better subsidies.

Table 9

Text of guidelines used by Health Boards in assessing farm incomes in the absence of accounts:

May 20, 1993

TEAGASC FARMER’S ASSESSMENT FIGURES

Dairy Cow	£360
Milch Cow	£150
Calves 0-12 months	£50
Stores/Heifers/Cattle	£100
Ewes and lambs	£30
Hoggetts	£10
Sows and Bonhams	£100
Pigs (fattened)	£5

TILLAGE

Barley per acre	£60
Wheat per acre	£60^(*)
Oats per acre	£60
Wheat per acre	£100^(*)

^(*) As issued