In general, the tax system treats cohabiting couples as two single people, while the social welfare system regards them as a couple. The current social welfare arrangements reflect the Supreme Court judgement in the Hyland case in May 1989. Mr. Hyland challenged provisions in the social welfare code which gave him, as a married man, a lower rate of unemployment assistance than he would have received if he was cohabiting. The Supreme Court ruled that these provisions were unconstitutional, in view of the State's pledge in the Constitution to guard with special care the institution of marriage and to protect it against attack. Following the Supreme Court judgment, the Government introduced legislation to extend the relevant provisions to cohabiting couples, so that all couples now receive the same treatment under the social welfare code.
However, the different treatment of married and cohabiting couples in the tax and social welfare systems causes problems for those affected by it. This question was examined in some detail by the expert working group on the integration of the tax and social welfare systems. The group considered that, in the light of the constitutional protection for the family, it would not be possible to treat cohabiting couples as single people for social welfare purposes, unless the same treatment was extended to married couples as well. The group rejected such an approach for a number of reasons; it would be costly, ill-targeted, involving considerable redistribution between different types of households, and could have undesirable social effects.
The alternative approach would be to change the tax treatment of cohabiting couples. The expert group noted that, if this were done on the basis of a broad definition of cohabitation, it could pose problems of control, and it would be necessary to lay down strict conditions to define "cohabiting couples". The group recommended that consideration be given to the possibility of allowing for the joint taxation of cohabiting couples, in cases where such a couple have a child mainly resident with them, who is maintained wholly or mainly by the couple concerned. The findings of the group are being examined by the relevant Ministers, with a view to putting forward specific proposals for a structured implementation of the report.