Paul McGrath (Westmeath, Fine Gael)
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Question 4: To ask the Minister for Finance if he has satisfied himself that the tax treatment of different categories of parents with children takes proper account of the financial pressures on them; and if he has plans to address this aspect of the tax code. [7437/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I assume what the Deputy mainly has in mind is support through the tax system for child care. The Government's policy is that child benefit is the main instrument through which support is provided for parents with children. One of the main advantages of this approach is that whereas tax relief would be of little or no benefit to those with low incomes, the provision of support for parents through the child benefit route means equality of treatment for all recipients.

The Government has substantially increased child benefit since coming into office in 1997. Overall expenditure on child benefit has increased by 279% from €506 million when the Government came into office in 1997 to an estimated €1,916 million in 2005. On the supply side, the provision of formal child care places is being stimulated through a programme of investment under the national development plan equal opportunities childcare programme, about which there were further announcements today. Over the next five years, about 17,000 places are expected to be created under this programme. The Government has also undertaken measures to favour the supply of child care by tax incentives to set up facilities and relief from benefit-in-kind taxation for free or subsidised child care where this is provided by employers. Taken together, these represent substantial measures to assist with the cost of child care.

In addition, the tax system treats parents with dependent children more favourably than persons with no dependent children, in recognition of the additional financial burden associated with parenthood. This is done mainly through the one parent family tax credit, the widowed parent tax credit, the incapacitated child tax credit and the home carer tax credit. Persons who qualify for the one parent family tax credit, including widowed parents, qualify for the associated standard rate band cut-off point which is €33,400 in 2005. This is €4,000 greater than that which applies for a single person.

Paul McGrath (Westmeath, Fine Gael)
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Since the Minister has indicated that child care assistance is through the child benefit system, is he aware that child care costs in the provinces are approaching €150 weekly and €200 weekly in the city, while child benefit is no more than €130 monthly? How can this be a measure to help with child care if the money falls so far short?

The Minister said in his reply that equality of treatment for all is important. How can he say there is equality of treatment? For example, separated parents of a child get four times the tax credit anyone else would get. A married couple living together gets the double allowance, the married couple's allowance, while an unmarried couple living together gets the single allowance. How can the Minister say the system is promoting equality while a separated couple, be they married or a couple who have just separated, gets four times the tax credit given to an unmarried couple living together?

The Minister mentioned the spouse's home carer's allowance. That has not increased in value since it was introduced and remains at €770 per annum. It affects couples where one spouse stays at home. Such couples are severely discriminated against under the tax code. They attract the top rate of tax when their annual income reaches €38,000. If their income is greater than that they pay a lot more in tax than a couple with one spouse going out to work. Does the Minister agree it is time those issues were addressed?

Brian Cowen (Laois-Offaly, Fianna Fail)
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As I said, since this Government came to office in 1997 child care benefit has increased by nine times the rate of inflation during the period. That is a fair indication of the effort being made. It is always a question of resources. Clearly, child benefit does not defray all family child care costs, nor was it designed to do so. It was, however, recognised as being probably the best mechanism by which support would be provided for families. It was not meant to defray the total costs of family requirements but would certainly be of some assistance to them. The fact of the benefit increasing at a rate of nine times more than the consumer price index is a fair indication that the policy of the Government has been to use that benefit as a means of providing some assistance in these circumstances.

The home care tax credit, which is €770 per annum and may be claimed by a jointly assessed married couple where one spouse remains in the home to care for one or more dependants, was not increased in the budget but was the only credit that was not increased. The one-parent family, widowed parent and incapacitated child tax credits were increased. The Deputy is entitled to highlight the only one that was not increased but I am entitled to mention the other increases. The home care tax credit was introduced in the Finance Act 2000 and was designed to recognise the contribution made by a spouse who remains working in the home. The provision is intended to assist in cases where a spouse has forfeited a second income to care for dependants in the home.

The Deputy asked why double income married couples get nothing extra through the tax code in respect of their children. It is a question of targeting resources. Under Government policy, the main instrument through which the State provides support for parents with children is the child benefit system. Expenditure on it is more than €1.9 billion, which is a not inconsiderable amount. I have no plans to move away from that approach but we will keep the issue under review.

Finian McGrath (Dublin North Central, Independent)
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The Minister has not delivered.

Paul McGrath (Westmeath, Fine Gael)
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The focus of the Minister's attention on child care is the child benefit system but that does not provide adequate help to alleviate financial pressure on married couples. Many people pay an amount for child care equivalent to their mortgage repayment each month. It is a significant burden on young working couples who have managed to purchase a house and who are trying to rear children. Does the Minister concede his efforts through the child benefit system are inadequate and do not meet the needs of young couples and that he must refocus his attention on others method to help them with child care costs?

Brian Cowen (Laois-Offaly, Fianna Fail)
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The matter is kept under review. It is a challenge to the system to see what way we can do this but every Member accepts that using a tax credit for child care has a significant discriminatory effect against low income couples.

Paul McGrath (Westmeath, Fine Gael)
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There are ways around that.

Brian Cowen (Laois-Offaly, Fianna Fail)
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One can devise a range of measures but it is a question of targeting resources. We have trebled that resource since coming into office from €531 million to €1.9 billion, which represents a considerable transfer of funds to this area. An extra €1.3 billion is going into the child benefit system. Progress is being made and those who have problems with it have yet to come up with alternatives.

Finian McGrath (Dublin North Central, Independent)
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The Minister is losing thousands of workers.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy should keep an eye on the four seater. He has enough on his own plate rather than worrying about me.

Finian McGrath (Dublin North Central, Independent)
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I am safe enough.