Éamon Ó Cuív (Galway West, Fianna Fail)
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165. To ask the Minister for Finance the amount of PAYE, USC and PRSI payable in 2022 by a one-income family with an income of €100,000 with only basic tax credits, including the homemaker's tax credit, as compared with a two-income family with each earning €50,000; the reason for the disparity in the amount paid; and if he will make a statement on the matter. [55042/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The below computations set out the PAYE income tax, PRSI and Universal Social Charge (USC) for the taxpayer unit cases request by the Deputy. It should be noted that for the purposes of answering the Deputy’s question it was necessary to make a number of assumptions, for example, that the taxpayers are private sector employees and full rate PRSI contributors.

Example 1 – Couple (Married/Civil Partnership), one income, with children earning €100,000 per annum.

Example 2 – Couple (Married/Civil Partnership), two incomes, earning €50,000 each per annum.

As the Deputy will be aware, prior to 2000, the income tax system in place allowed for full joint assessment of married couples. This meant that the earner in a single income couple could use the combined tax allowances and standard rate band available to both individuals – i.e. double the personal tax allowance and rate band available to a single earner. As a result, where the primary earner of a couple had sufficient income to use the available allowances and bands in full, the second earner faced the marginal rate of tax from the first pound of income earned, which acted as a disincentive to workforce participation for second earners.

A process of moving towards an individualised system of income taxation began in the tax year 2000/2001 with the stated economic objectives of increasing labour force participation and reducing the numbers of workers paying the higher rates of income tax. Many European countries have made similar moves towards a partial or fully individualised income taxation system on the grounds that it improves equality and economic independence for women.

The process of individualisation was never completed with the result that we now have a hybrid system. Up to €9,000 of the standard-rate band may be transferred between spouses/civil partners and the personal tax credit that applies in the case of persons who are married or in civil partnerships may be allocated in full to one spouse/civil partner. Because the income tax system allows married/civil partnership couples to choose whether to be jointly or individually assessed, there can be a difference between the tax liabilities incurred by such 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/civil partner works primarily in the home to care for a dependent person, such as a child. This credit was originally introduced in the context of the move towards individualisation. It recognises the choices made by families where one spouse/civil partner stays at home to care for children or the elderly.

It is worth pointing out that recent Report of the Commission on Taxation and Welfare recommended a phased move towards individualisation of the Standard Rate Cut off Point as a step towards addressing disparities in the income tax system, facilitating increased employment, and decreasing the gap in the employment rate between men and women.

As the Deputy will be aware from my Budget Day announcement, the Government is committed to developing a medium-term roadmap for personal tax reform, taking account of the recent Report of the Commission on Taxation and Welfare, together with other related personal taxation issues.

Finally, it is also worth pointing out that PRSI and USC charges are already on an individualised basis.