Brendan Griffin (Kerry South, Fine Gael)
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62. To ask the Minister for Finance the savings expected in 2014 from changes made to one-parent family tax credit as a result of budget 2014; his views on the difficulty that the changes have caused for parents adversely affected; and if he will make a statement on the matter. [21957/14]

Michael Noonan (Limerick City, Fine Gael)
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As you are aware the One-Parent Family Tax Credit (OPFTC) has been replaced with a new Single Person Child Carer Credit from 1 January 2014.  The restructured credit is of the same value i.e. €1,650 per annum as the one-parent family tax credit and also includes the same entitlement to the additional €4,000 extended standard rate band, which increases it to €36,800 per annum, before liability to higher rate of income tax arises.  However, the credit is more targeted in that it is, in the first instance, only available to the principal carer of the child. 

When first proposed in Budget 2014 it was initially estimated that the changes would yield around €18 million in 2014 and €25 million in a full year. However, as a result of an amendment which I brought forward at Committee Stage of the Finance Bill, which allowed a principal carer who is entitled to the credit and who does not wish to avail of it to surrender it to a secondary carer, the expected yield is now estimated at €16 million in 2014 and €23 million in a full year.

It is essential to regularly review all tax reliefs, credits and incentives in order to ensure that they are properly targeted and if necessary re-focused in order that they can achieve the socio-economic objectives that are set for them. 

The new credit is designed to be an activation measure, which was the original intention behind the OPFTC.  It is designed to be an in-work benefit to support the primary carer to take up, or remain in, employment. It should not be considered as a supplementary source of income, on which the financial support of a parent depends. 

The Commission on Taxation acknowledged that the OPFTC played a role in supporting and incentivising the labour market participation of single and widowed parents.  However, in its recommendations it concluded that the credit should be retained but that it should be allocated to the principal carer only. The restructuring of the credit will achieve such an outcome. 

It is important to note that there is no tax credit available to assist married couples with the costs associated with raising their children. The changes that were introduced for single person child carers in Budget 2014, ensure that the benefit of the tax credit goes, in the first instance, only to the person who has the care of the child for the majority of the tax year.

While I understand the difficulties being experienced by those that have lost the OPFTC and who have not qualified for the new SPCCC, I am satisfied that the new credit targets limited Exchequer resources to where they are needed most.