As reported in today’s Irish Independent working mothers will lose out on up to €2,700 per child under measures to tax maternity benefit for the first time.
Under the current system, women do not have to pay any tax on the €6,812 of maternity benefit payments they get for six months after the birth of their child. But from July 1st they will have to hand back up to €2,700 to the Revenue because the payments will be taxed at up to 41% from that date. Finance Minister Michael Noonan stood over the implementation of the cut, saying that some women were earning more while they were on leave than when they were in work, and that "part of the general policy is that persons shouldn't enjoy a bigger take-home pay when they are out of work than in work".
Many women actually get more in their take-home pay while they are on maternity leave due to the way the system is currently set up. The State pays a maximum of €262 per week to a woman on maternity leave for six months or a total of €6,812. Around 90% of women on maternity leave get this amount. But many public and private sector employers opt to give a "top up" to ensure that a woman gets her full wages, and tax is only paid on this "top-up" payment, meaning that women on maternity leave often end up with more in their pay packet.
The taxation of maternity benefit was announced in the Budget, but the individual cost to working mothers is only becoming apparent now. The measure will bring in €15m in extra tax revenue this year, and €40m in a full year.
