Dáil Éireann debate -
Tuesday, 8 Mar 1994

Vol. 440 No. 1

Written Answers. - Community Employment Development Programme.

Richard Bruton

Question:

45 Mr. R. Bruton asked the Minister for Finance if his attention has been drawn to the fact that lone parents who are taking up the opportunity to work on the community employment development programme are now being assessed for tax even on the money which they have to set aside for child minding expenses; and the steps, if any, he will take to correct this situation which is damaging the value to participants of taking up a work opportunity.

Minister for Finance (Mr. B. Ahern)

In October 1992 as part of the Programme for Economic and Social Progress the Government introduced the Community Employment Development Programme (CEDP). Projects were set up in twelve pilot areas known as “PESP Pilot Areas”. It was agreed at that time, on an administrative basis, to allow a special tax exemption to facilitate the pilot scheme. It was never intended to be long-term in nature.

At the close of the pilot period, the experience with the scheme gave rise to serious concerns that a wide scale tax exemption to participants of CEDP projects could give rise to distortions within the tax system.

I would point out that persons whose sole income is derived from the CEDP will not, in many cases, be liable to income tax as their tax free allowance will exceed their income. The extent to which tax will actually arise on CEDP payments will, in many cases, depend on the level of other taxable income a participant has in a particular tax year.

In relation to income set aside for child minding expenses being assessable for income tax purposes I would point out that there are no measures in the tax code which allow persons to deduct such expenses from their income for tax purposes. I could not agree to introduce such a general tax concession as it would be very costly to the Exchequer in terms of revenue foregone which would have to be made up elsewhere. Furthermore were such a measure introduced it would undoubtedly lead to cognate demands from other taxpayers for reliefs for other personal expenses which in equity would be hard to resist.

In addition to introduce such a measure would clearly lead to a narrowing of the tax base which would run counter to stated Government policy.