Simon Harris (Wicklow, Fine Gael) | Oireachtas source

As I was saying, in tandem with individualisation, a home carer allowance was introduced to compensate couples where one spouse stays at home to care for children or other qualifying individuals. Individualisation was progressed to some extent in later years but was never completed. The result is that we now have a hybrid system with the standard rate band being partially transferable between spouses - €9,000 being the gap between single and married one-earner bands. To complete or reverse individualisation would cost in the region of €800 million.

The Commission on Taxation recommended that no change be made to the current system. It concluded that the current system represents a balance between acknowledging the choices families make in caring for children and taking account of the need to encourage labour market participation. The commission said that the home carer's tax credit was integral to the current hybrid system of individualisation and that "it would not be realistic to contemplate its withdrawal while the current arrangements in relation to the tax bands continue to exist or in circumstances where band individualisation is completed".

Senators may be aware that on budget day, the Minister's Department published a number of policy documents, including the report on tax expenditures which included new guidelines for best practice in respect of the evaluation of tax expenditures. The report describes the purpose and main features of tax expenditure in an Irish context. In particular, it outlines the limited circumstances where tax expenditures should be used as an alternative to direct Exchequer funding. The report also discussed recent tax expenditure evaluations carried out in Ireland in the past few years. The guidelines are informed by international best practice in this area and work carried out in other countries. It is available on the budget website and the guidelines have been circulated to all Secretaries General in all relevant Departments.

Given the recent reviews carried out by the Commission on Taxation, the Minister does not believe that a full cost-benefit analysis on the home carer's tax credit is warranted at this time. However, the Senator may be interested to know that the Revenue Commissioners estimate that the home carer's tax credit costs €63.2 million and was availed of by 84,400 in 2012, which are the latest figures available, and that the credit is currently worth €810 per annum to qualifying families.