Charlie McCreevy (Kildare North, Fianna Fail)

The intention of this recommendation is to increase the dependent relative tax credit from €60 to €100 per annum. The credit was significant for a long time, until the recent past, not for its monetary value but because it opened up the way for other reliefs, including relief in respect of the medical expenses of a dependent relative and mortgage interest relief in respect of a loan obtained for the purpose of a dwelling used rent-free by such a relative. Such relief has not been contingent on entitlement to the dependent relative tax credit since the definition of dependent relative, for the purposes of medical expenses, was changed in the Finance Act 2001. The importance of the dependent relative tax credit, therefore, has declined and I am not inclined to revitalise it. I indicated to the Dáil during a debate on the Finance Bill last year that I would like to make the tax credit certificate so simple that it would not, in effect, contain anything other than the single or married tax credit and tax band. In the circumstances I have outlined, I cannot support the recommendation.

The cost of this recommendation is estimated at €600,000 in 2003 and €800,000 in a full year. As I signalled to Senator McDowell last year, I intended to limit the presence of the smaller tax credits on the tax free allowance certificate. The dependent relative tax credit, for example, is just €60 per year, so it does not benefit those who claim it to any great extent, particularly as the relevant amount of money before one enters the tax credit has been increased. I signalled last year that I intend to remove the credit and other similar credits from the tax code. I would like to make the tax allowance certificate as simple as possible and I would have done so in the budget, were it not for the fact that I wanted to make minimal changes to the tax code this year.