Anne Rabbitte (Galway East, Fianna Fail)
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87. To ask the Minister for Finance his views on the future of the home carer tax credit. [40259/16]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware the Home Carer Tax Credit is currently available to families where one parent works primarily in the home to care for children or the elderly. 

The Home Carer Allowance (as it was then) was first introduced in Finance Act 2000 in the context of the commencement of a planned move to the full individualisation of the income tax system.  Such a system would have resulted in a two-parent, single-earner family having the same net income from a given gross wage as a single individual i.e. it would no longer be possible for the tax bands and allowances of the non-earning spouse to be used by the earning spouse.  The Home Carer Allowance was introduced in order to ensure a balance was maintained between those going out to work and carers in the home, and in recognition of the choices families make in caring for dependents in the home. The Deputy will be aware that the move to full individualisation of the income tax system was never completed.

The 2009 Commission on Taxation examined the tax band structure and income tax credits which apply to married one-earner and married two-earner couples and recommended that they should remain in place.  The Home Carer Credit forms part of the current "hybrid" structure relating to band individualisation, and the Commission concluded that it would not be realistic to contemplate its withdrawal where the current arrangements in relation to the tax bands continue to exist or in circumstances where band individualisation is completed.  Furthermore, the Commission considered that, as a general principle and subject to resource constraints, the value of the credit should be increased generally in line with the value of other personal tax credits.

While the value of other personal tax credits has generally remained constant since 2011, I have increased the value of the Home Carer Credit in both Budgets 2016 and 2017, and it will now stand at €1,100 per annum with effect from January 2017. The Budget 2017 increase follows a commitment in the Programme for a Partnership Government to support parents who choose to stay at home and care for their children through an increase in the Home Carers Credit.

The Deputy may also be aware that Revenue has, for a number of years, taken steps to automatically allow the Home Carer Credit without the person having to make a claim, wherever possible. For example, Revenue uses data it receives from the Department of Social Protection in relation to child benefit, together with other data from Revenue's own records, to automatically grant the credit. Revenue also pre-populates the annual tax returns of self-assessed taxpayers with the Home Carer Credit where it was claimed in the previous year.  In 2014, the most recent year for which full information is available, the Home Carer Credit was claimed by approximately 80,900 families, at an exchequer cost of €60.9 million.