Trevor Sargent (Dublin North, Green Party)
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Question 154: To ask the Minister for Finance his plans to provide tax relief to parents on payment of crèche fees in cases in which one child alone can cost €953.33 per month for crèche fees and parents are being forced out of the workforce as a result, particularly if they have a second child. [4366/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 154 and 156 together.

As the Deputies will be aware, over the past number of years the Government has considered carefully the whole area of child care. It has been decided as a matter of policy that child benefit will be the main instrument through which support will be provided to parents with children. One of the main benefits from this approach is that, whereas tax relief would be of little or no benefit to those with low incomes, the provision of support for parents through the child benefit route means equality of treatment for all recipients.

In line with this policy approach, the Government has substantially increased child benefit since coming into office in 1997. Overall expenditure on child benefit has increased by 279%, from €506 million in 1997 to an estimated €1,916 million in 2005.

To address the availability of services, the supply of formal child care places is being stimulated through a programme of investment under the national development plan equal opportunities child care programme, EOCP. The EOCP funds capital development to increase places, support staffing costs for facilities targeting disadvantage and improve child care quality. Over the next five years, 2005-09, the capital envelope for the planned programme of continued investment in child care facilities will be €313 million, which is expected to create about 17,000 places — some 3,400 per annum for each of the next five years. The 2005 allocation for the EOCP provides €83.4 million, of which €43.8 million is current and €39.6 million is capital funding.

The Government has also undertaken measures to favour the supply of child care by tax incentives to set up facilities and relief from benefit-in-kind taxation for free or subsidised child care where this is provided by employers. Taken together, these represent substantial measures to assist with the cost of child care and I have no plans to introduce additional measures at this time.

I am informed by the Revenue Commissioners that figures are not available to estimate with any accuracy the cost of introducing tax relief at the standard rate of tax for child care expenses. However, it is tentatively estimated that if a tax credit of €1,200 per child, that is, the equivalent of an allowance of €6,000 at the standard rate of tax, was introduced for all children under six years of age, the cost to the Exchequer would be in the region of €223 million in a full year. If the tax credit was confined to children where both parents are working and to children of single and widowed parents who are working, the cost would be in the region of €161 million in a full year.

The numbers of taxpayers likely to benefit from such measures are estimated at 140,890 and 102,145, respectively. It is not possible to estimate the likely offset due to child care activities moving into the formal taxable economy.