Clare Daly (Dublin Fingal, Independent)
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221. To ask the Minister for Finance the reason the standard cut-off income rate for PAYE taxation is different for married couples with one income as distinct from married couples with two incomes; if an assessment has been carried out of the discriminatory impact this has on married persons who stayed at home to raise their children; his plans regarding same; and if he will make a statement on the matter. [15154/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The move towards a system of individualisation commenced in 1999, and is now integral to the overall income tax system. When first announced, the stated purposes of individualisation were to ease the burden on single persons which accounted for 65% of the work force, 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 result is that we now have a hybrid system. Up to €9,000 of the standard-rate band can be transferred between spouses and the married personal tax credit can be allocated in full to one spouse. Because the income tax system allows married couples to choose whether to be jointly or individually assessed, there can be a difference between the tax liabilities incurred by married couples on the same household income, depending on the method of assessment chosen.

However, in lieu of fully transferable rate bands, a Home Carer Tax Credit may be claimed where one spouse works primarily in the home to care for a dependent person, such as a child. This credit was introduced in the context of the move towards individualisation, in recognition of the choices made by families where one spouse stays at home to care for children or the elderly.

This credit was increased in both Budgets 2016 and 2017, and it now stands at €1,100 per year, effectively allowing the credit to shelter family income of €5,500 from taxation.

The issue of tax individualisation was assessed and considered by the Commission on Taxation in 2009, that body recommended that 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.