Brian Cowen (Laois-Offaly, Fianna Fail)

The amendment relates to the home carers tax credit of €770, which under section 466A of the Taxes Consolidation Act 1997, is granted to married couples where one spouse works at home to care for children, the aged and incapacitated person. The amendment proposes that the amount of the home carer credit should be the same as the maximum of the employee tax credit, commonly known as the PAYE credit which, by virtue of section 3 of the Bill, would amount to €1,270. In other words, the amendment seeks to increase the value of the home carer tax credit by €500 per year. It is estimated that to increase the home carer tax credit, as proposed, would cost approximately €40.5 million in 2005 and €59.2 million in a full year.

As I indicated in my Budget Statement last December, the total cost of the income tax and levy changes I made is €682 million in a full year, which is more than double the previous year's total. The increase I made in the employee tax credit, in addition to benefiting all workers, was to ensure that all those on the minimum wage are fully outside the tax net. I have decided not to increase the home carer tax credit on this occasion. However, it is worth noting that couples who benefit from the credit will benefit in this budget from the increase in the employee tax credit and the personal tax credit which I have announced. For example, a married one income earner on PAYE with two children and a salary of €40,000 will gain €838 in total in this budget. It is made up from €350 in tax credits, €380 in band widening and €180 in child benefit. It is an issue at which we will continue to look in the future.

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