Brian Cowen (Laois-Offaly, Fianna Fail)

The issue of making unused tax credits refundable was considered by a working group established under the Programme for Prosperity and Fairness to examine the role refundable tax credits can play in the tax and welfare systems. The group was made up of representatives of the social partners and was chaired by my Department.

The current established approach to taxation in Ireland and other OECD countries is that while the tax system has a role to play in the broader issue of equitable income distribution, it is not the primary mechanism for the distribution of income to low-income households. Instead, the social welfare system is the main instrument for this.

It is also the established and generally accepted view that the fundamental role of taxation is to raise revenue to fund the provision of services by the State. The introduction of a refundable tax credit system would be a major departure from this position. It would have significant implications for the social welfare system as well as wide-ranging economic, cost and administrative implications.

See this speech in context