Written answers

Thursday, 16 December 2021

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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109. To ask the Minister for Finance his plans to review the single-parent tax credit given the increases in the cost of living and the disproportionate effect this can have on single-parent families; and if he will make a statement on the matter. [62403/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The 2009 Commission on Taxation reviewed the One-Parent Family Tax Credit. It acknowledged that the credit played a role in supporting and incentivising the labour market participation of single and widowed parents but recommended that the credit should be allocated to the principal carer of the child only.

The One-Parent Family Tax Credit was replaced by the Single Person Child Carer Tax 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 it also carries the same entitlement to the additional €4,000 extended standard rate band, which increases that band to €36,800 per annum, before liability to higher rate of income tax arises. However, the credit is more strategically targeted, in that it will in the first instance only be available to the principal carer of the child.

The Single Person Child Carer Credit is available if you are the ‘primary claimant’. To be a primary claimant your qualifying child must live with you for the whole, or greater part, of the year (a period greater than 6 months). Ultimately, of course, the allocation of childcare responsibilities is primarily for parents or guardians to agree and a principal carer will be able to relinquish the credit in order than a non-principal carer can claim it.

Issues concerning the Single Person Child Carer Credit are outlined in a review conducted by my Department in 2015, which is contained in the Report on Tax Expenditures, available at the following link: budget.gov.ie/Budgets/2016/Documents/Tax_Expenditures_Report_pub.pdf.

I am satisfied that the Single Person Child Carer Credit in its current form is targeting State resources to where they are most needed. As such, I have no plans to review or amend the Single Person Child Carer Credit at this time.

In relation to the Deputy’s comments on the increased cost of living I would draw the Deputy’s attention to Budget 2022 income tax and USC measures. This included a substantial income tax package comprising of an increase of €50 in each of the main tax credits – personal tax credit, employee tax credit and the earned income credit – from €1,650 to €1,700. An increase of €1,500 in the income tax standard rate band for all earners was also announced. Further, the 2% rate band ceiling for USC will be increased for 2022 in line with the increase in the national minimum wage to ensure that a full-time adult worker who benefits from the increase in the hourly minimum wage rate of €10.20 to €10.50 will remain outside the top rates of USC. Further details can be located at the following link - www.gov.ie/en/publication/7e491-taxation-measures/.


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