Willie O'Dea (Limerick East, Fianna Fail)

The effect of the recommendation would be to double the value of the 2007 home carer tax credit of €770. The cost of the measure, if implemented, would be approximately €54 million in a full year and €37 million in 2008. The financial resources available to the Tánaiste for the budget 2008 personal tax package including, PRSI and health levy changes, amounted to €582 million, not an inconsiderable amount at a time when economic growth has slowed considerably.

The aim of the income tax measures contained in the budget is to use tax credits and bands to ensure low income earners remain outside the standard tax band and average earners remain outside the higher rate band, as promised in the Government programme. The measures are also focused on assisting the elderly, lone parents, widowed persons and widowed parents, those with a disability and carers. More than 54% of the resources in the personal income tax package were devoted to assisting those categories and the low paid.

Senator Twomey will appreciate that the resources available to the Tánaiste in budget 2008 were more restricted than in previous years and choices had to be made in respect of their allocation. To provide for a doubling of the home tax carer credit as recommended would mean increases in other income tax credits or reliefs would have to be curtailed or not implemented. The Tánaiste stated in an earlier debate on this year's Finance Bill that he is satisfied that budget 2007 allocated the available resources in a fair and equitable manner. For this reason, I am unable to accept the recommendation.

The tax position of a married single income couple does not change unless their income exceeds €44,400. According to the statistics available, two out of three married taxpayers in the country do not reach that level of income and as such the discrimination of the difference applies only to one third of married one-income couples. The maximum differential between the married one income couple and the married double income couple is €5,500 and as such the discrimination only kicks in when the married double income couple's earnings reach upwards of €70,800. The gap is not as great as is being portrayed.

A number of the increases in allowances introduced in budgets 2007 and 2008 specifically benefit married one income earners as opposed to anybody else. It is not true to say that the sole motivation for individualisation was to force married women out to work. The previous tax system bore hard on the single income earner. As far as I can recall, ten years ago a single person entered the PAYE net at the equivalent of what is now €84 per week. That is extraordinary. We have continued the practice of giving double tax relief to married couples. We were required first to concentrate our necessary resources on married persons, be they two income or one income couples, and then to change the structure and bring more balance into the system. In an effort to further balance it, we introduced the home carer credit. I accept this is the first increase in this allowance since 2000 when it was first introduced. The Government is committed to doubling the home carer's credit during its time in office rather than in one go.