Joan Burton (Dublin West, Labour) | Oireachtas source

On the issue of the State's recognition of the cost of rearing children, our tax system is probably a little unusual in that we do not recognise that cost through our tax system. As we all know, we recognise the cost of other adults who are partners or spouses and we recognise the dependency cost, perhaps, of somebody with a specific medical condition or disability. When it comes to recognising the cost of rearing children, the main element is child benefit. From an activation perspective, the key issue with child benefit is that it does not penalise a person if he or she takes up work. The vast bulk of child benefit is paid to women, although there is now a relatively small proportion of men who are the carers for children and receive the benefit.

In any kind of examination, I strongly suggest that the UK system of tax credits is unbelievably complicated and pretty much almost broke the UK Revenue and Customs in its efforts to bring in what was due. We should do this in the context of activation, particularly with respect to secondary incomes. The shift to a tax credit model must be examined thoroughly. Where it has been done, there must be a real-time system, especially if there are varying hours or if a person has two jobs, neither of which is a full-time job. A person might work in two schools, for example. I have no problem with an evaluation of the proposal but I would like the significance of child benefit to be recognised, as well as the fact that it covers children up to 18, provided that from 16 to 18 they remain in school or a form of education. That allows much flexibility and choice to different families.

I know Deputies might argue it is not enough. It stands at €140 per month and it is a pity it was not increased in this budget. I assume the €31 million given to the child care initiative in the Department of Children and Youth Affairs for the last quarter of the year is in lieu of some kind of child benefit, but that only goes to children who are quite young. We are not clear about a portion of it that goes to older children. Any studies on tax are welcome if they give more information. It is important there would not be the implication that if we did it a certain way, we could do away with child benefit.

In one of the Minister's earlier comments he referred to rates. With the people I meet, the critical issue in the Irish tax system, which is significant for both single and married couples, is that when a person goes to about €35,000 or €36,000 while single, he or she is into the top rate. There is a little extra if a couple is involved. To be honest, that is an area where we are at a disadvantage, for example, compared with the UK. In that country, the relative levels at which one moves to the top rates are much higher. Consequently, we need to examine the USC. I have always favoured that it be incorporated into pay related social insurance, PRSI. In the long term, as a country, we must provide pensions in retirement for people so contributions must be enough to cover that.