Dáil Éireann debate -
Tuesday, 15 Apr 1997

Vol. 477 No. 5

Written Answers. - Tax Yield.

Ivor Callely

Question:

76 Mr. Callely asked the Minister for Finance the income tax, PAYE, PRSI and other revenue collected from child care services in 1994 and 1995; the consideration, if any, he has given, since Deputy Callely last raised this question, to making expenditure tax allowable in respect of child care services, crèches, playgroups, schools and so on; and if he will make a statement on the matter. [9667/97]

Minister for Finance (Mr. Quinn)

I am informed by the Revenue Commissioners that the total tax and corporation tax liability of play-schools, kindergarten and Montessori schools for the year 1993, the latest year for which figures are available, is of the order of £720,000. Corresponding information is not available in respect of PRSI. This figure does not, however, include crèches which are classified elsewhere with other miscellaneous personal services and which cannot, therefore, be separately identified without carrying out an individual examination of all tax returns for such cases. Such an Examination could be carried out only at an disproportionate cost. Corresponding information on other taxes and duties either could not be obtained, or could not be obtained without undertaking inquiries which could be carried out only at disproportionate cost.

The question of allowing tax relief on expenditure relating to child care services raises complex issues with very different views on the likely impact of such a measure. The Second Commission for the Status of Women in its report to Government in January 1993 considered the matter but did not recommend that tax relief for child care expenses be given to working parents. The commission considered that it was preferable that any additional State assistance for child care facilities should be provided through increased investment in child care support and services rather than by providing tax relief to parents for work-related child care costs. (The NESC Report No. 1991 on women's participation in the Irish labour market reached the same broad conclusion). The commission noted that tax relief would do nothing to increase the supply or quality of child care and would not improve the training or the supply of qualified child care workers. Furthermore, it concluded that tax relief would be of little or no use to those with low or no income and that it would be of more benefit to the higher paid than low earners.

In this context, for example, it is tentatively estimated that if a tax allowance were introduced for the parents of children under five years to cover the cost of registered child care up to a maximum of £3,000 per annum, then the cost to the Exchequer would be £60 million. I have no plans to introduce tax relief for child care expenses at this time. As the Deputy is aware tax relief is but one of the methods by which assistance can be provided for children and may not, in fact, be the most appropriate method. The State already provides considerable assistance to parents, in particular through expenditure on child benefit, education and health services. I will, of course, keep the matter under review.