PARENTS of children aged five or under will get a monthly payment of about €100 per child in this week’s budget. The centrepiece of a new childcare package, the payment will be made to all families with pre-school children, using their sixth birthday as a cut-off point.

The move is expected to cost between €350m and €400m a year. It will not be linked to employment status or creche fees, to avoid a backlash from low earners and stay-at-home mothers.

Senior government sources have revealed that other headline features of Brian Cowen’s second budget will be measures to prevent high earners avoiding tax completely and increased funding and support for carers and the elderly.

One cabinet source said: “People who don’t pay any tax aren’t going to be able to get away with it any more. There will be some form of ring-fencing or limit we are introducing to ensure that everybody must pay some tax.”

Cowen will introduce his budget against a backdrop of increasing support for Fine Gael, the main opposition party. Two opinion polls published in Sunday newspapers today show Enda Kenny’s party up by 5% and 2% respectively. Fianna Fail is down 4% in one poll and slightly up in the other.

Last week Cowen and his officials on Merrion Street were keeping their options open on whether to include tax relief in this week’s childcare package to offset creche fees for families with both parents working. This is thought unlikely.

Ministers have not forgotten the furore that greeted the introduction of tax individualisation by Charlie McCreevy in the 2000 budget. A storm of protest from single-income couples provoked a post-budget revolt by Fianna Fail backbenchers which was only quelled by the introduction of a special tax allowance for the stay-at-home spouse.

The new allowance will, in effect, be an extra child benefit payment for almost 350,000 under-sixes across the country, but it will be “branded” separately so as not to be seen as part of the child benefit system.

Other elements of the childcare package will be an increase in paid maternity leave — rising from 18 to about 22 weeks — and an increase in unpaid paternity leave from a six-month entitlement to a one-year entitlement over the next two years. There will also be an income disregard of between €8,000 and €10,000 to allow those minding children informally in their own homes to “come in” from the black economy.

In relation to high earners, one finance official dismissed the possibility of a minimum tax to ensure that every income earner paid at least 20%. “That would simply become a target for the creative accountants these big hitters can afford,” he said.

Other government sources were insistent that measures would be found to ensure that all income was taxed to some level, possibly by way of limiting the amount of relief any individual can claim across a combination of tax shelters.

As revealed in The Sunday Times last month, high earners will no longer be able to enjoy the tax-relief scheme for artists or the stallion stud-fee tax break. Other shelters set for abolition include incentives for rural regeneration and for hotel, holiday cottage and car park construction.

Cowen is not expected to make great changes to excise duties on the “old reliables” as he takes care to avoid inflationary pressures in advance of sensitive talks on a new social partnership deal.

Cowen will also recognise the effect of fuel prices on welfare recipients with a 25%-30% increase in the weekly rate, the first in several years.

The fuel allowances, paid from October to late April, stand at €9 a week — or €12.90 for those using smokeless fuels.

Both rates are expected to rise by about €3 a week to offset price increases.

The government is also expected to go a long way towards meeting its commitments on a series of welfare headings under the Sustaining Progress social partnership deal.

This will mean that ordinary child benefit will rise by close to €10 a month to about €141 for the first and second child, and to €152 for each subsequent child.

Pensions will rise by about €10-€12 as the government nears its €200-a-week pre-election pledge.

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