Brian Cowen (Laois-Offaly, Fianna Fail)

The effect of Senator John Paul Phelan's proposal would be to broaden the focus of the one-parent family tax credit to apply not only to lone parents but also to cohabiting couples with dependent children where there is only one earner. The Senator wants the tax code to recognise the circumstances of couples in cohabiting arrangements.

The purpose, however, of the one-parent family tax credit is to target relief at lone and widowed parents raising children on their own. If support of the tax system were to be provided to cohabiting couples, it would not be appropriate to seek to do so by broadening the provisions of the one parent family tax credit. Where a couple cohabits, each partner is taxed as a single person and each is entitled to the tax credits at the standard rate band appropriate to single persons.

On Committee Stage in the Dáil, I indicated that the issue raised by the Senator is wider than the tax code and extends into the area of social policy. The working group which examined the treatment of married and cohabiting couples and one-parent families under the tax and social welfare codes reported in August 1999. It was sympathetic in principle to changes in the tax legislation to address the issues raised relating to cohabiting couples. It recommended the options it set out should be further considered.

However, it also acknowledged that a key issue is whether tax law should proceed ahead of changes to general law. Various developments have been made in the area. A consultation paper on the rights and duties of cohabitees was published by the Law Reform Commission in April 2004. The tenth progress report of the Oireachtas All-Party Committee on the Constitution, entitled The Family, was recently published. The Minister for Justice, Equality and Law Reform recently announced his plans to establish a working group to examine the area of civil partnerships and to prepare options on the various legislative choices available to the Government. Ultimately, decisions will be taken by the Government on the matter.

Child benefit is the main instrument through which support is provided to parents in respect of qualifying children. This is available to parents who are either single, cohabiting or married. The Government has substantially increased child benefit since coming into office. Overall expenditure has increased by over 300%, from €500 million in 1997 to €2,044 million in 2006.

The Government has initiated a five-year strategy to address child care, involving measures to increase the supply of child care places. These include increases in statutory paid maternity leave, the payment of a tax free early child care supplement from €1,000 per annum to parents with children under six years of age, and an income tax exemption for childminding, provided it is carried out in the minder's home and the income does not exceed €10,000 per annum.

I view as problematic and unwise a situation where changes in the tax code relating to the treatment of couples would set a headline in advance of developments in other relevant areas of public policy, for example in the legal recognition of relationships other than married relationships.

Under the circumstances, I am not prepared to accept the Senator's recommendation. No data on the circumstances of cohabiting couples are readily available. Such data would facilitate an accurate estimation of the cost of extending the one-parent family tax credit to cohabiting couples, if I was minded to do so. It is assumed that approximately 25,000 couples may be in a position to qualify for the proposed credit. The cost would be approximately €40 million per annum. The figure is based on the assumption that approximately one third of the estimated number of couples who are cohabiting would be eligible to benefit. It is, however, a rough estimate for indicative purposes only.