Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 3:

In page 11, between lines 18 and 19, to insert the following:

“Report on home carer’s tax credit

3. The Minister shall, within 3 months of the enactment of this Act, bring forward a report on the costs and benefits of the home carer’s tax credit.”.

We debated at some length on Committee Stage the income tax package announced in the budget last month. One cohort of people whom I highlighted is that of single income couples who may be married couples or civil partners, whose income falls just below the threshold for entering the higher rate of tax, for example, a couple with just one person working where the household income is in the region of €40,000 or €41,000. They are benefiting from the budget to the tune of €174 by virtue of the changes to the universal social charge but they are not benefiting from the other two elements of the Minister's tax-cutting package, which are the extension of the lower rate band and the reduction of the marginal rate of tax.

I made the point on Committee Stage that couples in this category are among those who are really struggling. Their incomes are above all the eligibility thresholds for a medical card, rent supplement and various social welfare entitlements, yet they are benefiting to the tune of only approximately one quarter, compared to a person earning €70,000 who is gaining by almost €750. This is a gain of €750 for someone on €70,000 or more, as opposed to €174 of a gain for a single income couple earning €40,000 or €41,000.

The Minister acknowledged on Committee Stage that tweaking the entry point for the marginal rate of tax and cutting the top tax rate results in anomalies. In my view this is a significant anomaly. I am raising the issue by means of the vehicle of the home carer's tax credit which was introduced in 1999, some 15 years ago, and which is set at the rate of €850 per annum.

It is there to benefit one income couples, where one spouse or civil partner stays at home to mind a dependant person, who generally is a child. The Minister could use this vehicle to iron out the anomalies created by way of the tax package.

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