Brian Cowen (Laois-Offaly, Fianna Fail)

This amendment concerns the home carer 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 or incapacitated persons. We discussed an identical amendment on Committee Stage which proposed that the home carer credit should be increased to €1,760, or the same as the maximum employee tax credit, commonly known as the PAYE credit, set out in section 3 of the Bill. In other words, the amendment would increase the value of the home carer tax credit by €990 per annum. The cost of increasing the home carer tax credit as proposed is estimated at €49.4 million in 2007 and €73.6 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 more than €1.25 billion in a full year, which is almost 40% greater than the previous year's total. The increases in the employee tax credit and the personal tax credit, in addition to benefiting all workers, were intended to ensure all those on the minimum wage would be completely outside the tax net and they removed approximately 88,000 low income taxpayers from the tax net this year. This means almost two out of every five wage earners or 846,000 will be outside the tax net in 2007, as compared with one third or 667,000 workers in 2004 and one quarter of the workforce or 380,000 persons in 1997. This is a highly significant development.

When one devises a budget and sets out spending plans, that is it for the year. While the amendment affords an opportunity to discuss such plans, there is no question of accepting an amendment that would incur an additional cost of €7.36 million in the current year. I do not subscribe to a number of the views expressed, including Deputy Boyle's reference to the need for social justice. This Administration has, through its taxation policies, provided a greater degree of social justice to low income earners than ever before with 40% outside the tax net altogether. Almost 500,000 people who paid tax under the rainbow Administration do not pay tax anymore because of the changes we have made and not all of them are low income earners. That is also a significant development in the context of a total workforce of more than 2 million with 600,000 new jobs having been created over the past decade. Some of those jobs resulted from changes we made to the tax code, including moving the burden of taxation away from work to capital and wealth. The Government parties have reduced the burden on income earners by one quarter and we have increased the total capital tax take from 5.7% to almost 16%. That is as it should be if one is to provide for greater social justice for working families. All working families know that but Members continue their efforts to table amendments such as this, which suggest that we have been remiss in looking after them when the position is quite the contrary.

Several income tax changes I introduced in this year's budget will benefit married one-earner couples. For the second year in a row such couples have received substantial increase in their credits and the standard rate band increased by €2,000 to €43,000. Personal employee tax credits were increased by €130 to €1,760 and €270 to €1,760, respectively. These changes ensure a married one-income couple in the PAYE system who received a home carer tax credit may earn up to €30,250 without any liability for income tax. The tax bill of a married one-income couple earning in excess of €43,000 will reduce in 2007 by an additional €970 per year as a result of the budget. People have examined the progressive nature of the budget changes, which have been benefited low income families more than high income families in percentage terms.

The latest data from the OECD, which was published last week, highlights that in 2006 a married one-income couple with two children in Ireland on the average production wage received more money in cash transfers from the State than they paid in income tax and social security contributions.

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