Catherine Connolly (Galway West, Independent)
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160. To ask the Minister for Finance the reason a married couple with one spouse working can earn up to €42,800 taxed at 20% while a single parent begins to pay the higher rate of tax after €37,800 which, given that the married couple with one spouse being a home maker also gets €1,100 extra credit, is discrimination against a single parent who pays an extra €1,000 in taxes; and if he will make a statement on the matter. [7370/17]

Michael Noonan (Limerick City, Fine Gael)
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A single parent may be eligible for the Single Person Child Carer Credit of €1,650 per annum. This credit also provides an entitlement to an additional €4,000 extended standard rate band. A single individual with no children is entitled to a standard rate band of €33,800. An individual in receipt of the SPCCC is entitled to a standard rate band of €37,800.

The income tax system started moving towards a system of individualisation in 1999, and individualisation is now integral to the overall system. When first announced, the stated purposes of individualisation were to ease the burden on single persons, including single parents, to take workers on the average industrial wage out of the higher rate of tax and more generally to facilitate a reduction in the numbers paying tax at the higher rate. Prior to this, a second spouse faced the marginal rate of tax on the first euro (or Punt as it was then) earned in his or her own name.  Individualisation was progressed to some extent in later years but never completed. The Home Carer credit was introduced in the context of the move towards individualisation of the tax system, in recognition of the choices made by families where one spouse stays at home to care for children or the elderly.

The issue of tax individualisation was considered by the Commission on Taxation in 2009 and that body recommended no change should be made to the current system. It concluded that the current system represents a balance between, on the one hand, acknowledging the choices families make in caring for children and, on the other, taking account of the need to encourage labour market participation.

The composition of households can vary and thus the costs and expenses of households can also vary.  Generally speaking a household of a greater number of individuals will generally have greater outgoings than a household of a lower number of individuals. I am satisfied that the income tax system provides positive support to the various household compositions.

The Deputy will be aware that my Department published an Income Tax Reform Plan, in July last year, providing a detailed overview of relevant policy considerations, including the necessity to maintain the breadth of our income tax base, and retain appropriate levels of taxation for high earners.

The purpose of this Income Tax Reform Plan was to inform all members of the Oireachtas of the issues and options which will underpin future income tax reform, and it is my hope that all members of the Oireachtas will engage constructively in debating options for future reform in this area. In this regard the scope for change will be dependent on the level of available fiscal resources.