Michael Ring (Mayo, Fine Gael)
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Question 355: To ask the Minister for Finance his plans to address the discrimination against single income families, in cases in which one person earns €56,000 and pays 20% tax on €37,000 plus 42% income tax on the balance yet a married couple with two incomes pay 20% tax on the first €56,000 of taxable income, particularly as the home carer tax credit of €770 was not increased in budget 2005 or in the two previous budgets; and if he will make a statement on the matter. [1113/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do not accept the Deputy's assertion that there is unfair discrimination in the situation outlined in his question. While the couples may have the same income, they are not in the same situation. The difference in treatment between married one income and married two income couples with regard to the standard rate band arises as part of the policy of band widening which was commenced in budget 2000. The aim was to achieve a position that eventually each individual would have his-her own non-transferable standard rate band. This was with a view to achieving a number of objectives. It was seen to be the most cost effective way of moving towards a position where 20% of income-earners are on the top rate of tax.

As the Deputy may be aware, this is one of the key Government taxation priorities set out in the Government programme and endorsed in the current national agreement Sustaining Progress. It helped to deal with the situation where single people on moderate wages had a relatively high tax burden and it also helped address the problem whereby married persons returning to the workforce faced high marginal rates of tax almost from the first euro of earnings because the full band was already being used by their spouse.

It should be noted that married couples can still benefit from double personal tax credits. The employee — PAYE — credit is only available to employees and not to others so it is not doubled up for a married one-earner. However, this has always been the position in relation to the PAYE credit which was introduced as an allowance in 1979. It might also be noted that there are costs associated with earning an income which are likely to be greater if two persons rather than one person must work outside the home to earn the same total income.

The home carer tax credit, formerly an allowance, was introduced in Finance Act 2000 and is designed to recognise the contribution made by a spouse who remains working in the home in order to care for children or the aged or incapacitated, other than the spouse of the claimant. It currently amounts to €770 per annum. The provision is intended to cover situations where a spouse has forfeited a second income to care for dependents in the home. It is available only to married couples who are jointly assessed for tax. While it was decided not to increase the home carer tax credit in budget 2005, it is worth noting that couples who benefit from the credit will gain significantly in 2005 from the income tax changes I announced in the budget. For example, a married one-earner on PAYE with two children on a salary of €58,800 per annum will gain €765.48 from the budget. This is made up of €658 from increases in tax credits and band widening as well as €180 from increases in child benefit, less €72.52 in additional social insurance contributions.

The position is that nobody has lost out as a result of the introduction of the band widening policy relative to his or her former position. In fact, as a result of positive developments in the tax system over the last number of years, including band widening, all categories of income earner, including married one-earner couples, have seen their average tax rates fall considerably.

In an international context, the most recent data available from the OECD relating to the year 2003 indicate that for the average production worker, who is married with two children with a carer in the home, Ireland now has the lowest tax wedge — that is, income tax, levies, and employers and employees PRSI, as a percentage of gross income plus employers PRSI — in the EU and, indeed, in the entire OECD. Furthermore, recently released OECD data show that the tax wedge for such workers has fallen more sharply in Ireland than in any other OECD country reflecting the progress that the Government has made in this area.

Mary Wallace (Meath, Fianna Fail)
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Question 356: To ask the Minister for Finance if there are special exemptions from stamp duty for purchasers who have no option but to move under advice of a Department or agency; and if he will make a statement on the matter. [1114/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will be aware that there are a number of incentives in place to assist owner-occupiers in purchasing residential property. There is no stamp duty on the purchase of new residential property for owner-occupiers where the dwelling is not greater than 125 sq. m. and complies with certain conditions in relation to building standards. If the property is over 125 sq. m., stamp duty is charged on the site value or one quarter of the total value of the property, whichever is the greater. Also, I introduced a stamp duty relieving measure in the 2005 budget for first-time house purchasers who are owner-occupiers of second hand houses by increasing the stamp duty exemption threshold for such purchasers from €190,500 to €317,500 and by having reduced rates for house values up to €635,000.

Mortgage interest relief, MIR, is also available at source in respect of interest paid on moneys borrowed for the purchase, maintenance, repair or improvement of that taxpayer's main residence. From 1 January 2003, a first-time mortgage holder can claim 100% tax relief for the first seven years, five years prior to 1 January 2003, of the mortgage at the standard rate of tax, currently 20%, on the interest paid within the following limits: €8,000 for a married couple who are jointly assessed for tax; €8,000 for a widow(er); €4,000 for a single person.

Apart from those outlined above, there are no special exemptions from stamp duty in the circumstances outlined by the Deputy and there are no plans to introduce such exemptions.