Cut in Child Allowances Would Push Over 40% of Children Below Poverty Line, Says NII

Officials at the National Insurance Institute predict that if, as part of the efforts to reduce government spending, state support for child allowances is cut in half, it would increase the proportion of children living below the poverty line by more than 6 percentage points to over 40 percent.

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A 50 percent cut would involve a reduction of about NIS 3.5 billion in child allowance support.

Currently about 35 percent of Israel’s children live in poverty, but such a cut would increase that percentage to 41% or 42%, NII officials say. In 2011, according to the agency’s statistics, there were about 860,000 children living below the poverty line. If the NII’s projections are correct, a NIS 3.5-billion child allowance cut would add about 50,000 children to the ranks of the poor.

The projection is based on the high end of child allowance cuts that are thought possible. It is expected that the state could cut somewhere between NIS 2.5 billion and NIS 3.5 billion.

Among the approaches being considered by the treasury is instituting a uniform monthly support level of NIS 175 per child rather than paying more per child to large families.

Officials at the NII consider major budget cuts inevitable due to the budget deficit the country is facing and because of the Finance Ministry’s view that child support payments provide a disincentive to parents to enter the workplace.