Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank the Deputy for raising this important matter. I was involved in the Committee Stage debate on the last Finance Bill and recall this was an issue of considerable discussion both for the select committee and during the plenary session of the House. At the time the Minister for Finance gave a commitment to the House that he would consider the operation of the new credit to make sure it was operating in the fairest way possible. As the Deputy will be aware, the new single person child care credit is of the same value, that is, €1,650, as the previous one parent family credit. It also carries the same entitlement to the extended standard rate tax band of €36,800 per annum. The new credit is targeted such that it is available only to the claimant who is the principal carer of the child, that is, the individual with whom the child resides and who looks after the child for the year or the greater part of the year. A maximum of one credit is available per single carer claimant, regardless of whether he or she cares for more than one child.

Given the difficult fiscal environment, it is essential that all tax reliefs, credits and incentives are kept under review in order to ensure they are properly targeted and, if necessary, refocused in order that they can achieve the objectives all Members seek. The one parent family credit was in certain cases being claimed by multiple individuals in respect of a single child. I recognise this point was raised by the Deputy in the initial part of her contribution. A system that allows multiple claims in respect of the same child is unsustainable in current budgetary circumstances. It is important to point out that the new credit has been designed to work as an activation measure and is to be an in-work benefit to support the primary carer to take up, maintain or remain in employment. It will assist single parents or carers with the cost of child care.

In addition, it should be noted that this new policy has been agreed to by the Government based on a recommendation brought forward by the Commission on Taxation that the credit should be retained but that it should be confined to the principal carer only. The Government is satisfied that the restructuring of the credit will achieve such an outcome. In the first instance, it is the responsibility of the parents to look after a child, including financially. Tax credits should not be considered a supplementary source of income or an alternative to the financial support of a parent. It is worth pointing out that where a principal carer is married, in a civil partnership or cohabiting, he or she will not be entitled to the new credit or indeed the former one. In such circumstances, the principal carer cannot relinquish the credit to a secondary carer. In addition, a secondary claimant who is married, in a civil partnership or cohabiting will not be entitled to the new credit or indeed the former one, regardless of the marital status of the primary carer.

The single person child carer credit initially is granted to the principal carer. This usually is the parent who receives child benefit in respect of the child from the Department of Social Protection. In these circumstances, the Government believes the approach it has taken, difficult as it is, attempts to restructure this tax credit in such a way as to help people to get back to work and, equally, to help people who need that support. As the Deputy noted, the Government is conscious and aware of the fact that many such relationships which break up on an acrimonious basis must be handled sensitively. The Minister for Finance did give a commitment to the House which I will reiterate today, namely, that the Government will consider the operation of the credit this year to ascertain whether it can be improved and establish whether it can be tapered in such a way as to maximise the benefit for those concerned. The matter is under active review, as are all such credits. This was the intention with the original objective, as set out in the Bill.

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