Dáil Éireann debate -
Wednesday, 8 Nov 2000

Vol. 525 No. 3

Written Answers. - Child Care Facilities.

Noel Ahern

Question:

205 Mr. N. Ahern asked the Minister for Finance the tax incentives which have been created in the past few years to encourage employers to provide crèche facilities; if these measures have been successful; the number of employers who have taken up the measures; the number of plans provided; the estimated cost to the Exchequer; and if he will make a statement on the matter and outline further measures which he proposes. [25242/00]

Minister for Finance (Mr. McCreevy)

The Finance Act, 1999 introduced capital allowances for expenditure on the construction, refurbishment or extension of child care premises which meet the required standards as set out in the Child Care Act, 1991. In budget 2000, as part of a package of measures to address the provision of child care facilities, I announced that for expenditure incurred on and from 1 December 1999 accelerated capital allowances at a rate of 100% would be allowable. This accelerated allowance is available to both owners of the child care facilities and also to investors who wish to invest by way of leasing arrangements. Section 63 of the Finance Act, 2000, amends section 843A of the Taxes Consolidation Act, 1997, so as to provide for these capital allowances. Following consultation with the EU Commission, on the issue of State aids, on 21 June 2000, I signed the necessary order bringing into effect section 63.

The introduction in budget 1999 of capital allowances for buildings used for certain child care purposes was estimated at the time to cost of £1 million in a full year, while the provision of accelerated capital allowances in budget 2000 was estimated to cost £1.5 million in a full year. I am advised by the Revenue Commissioners that because the available statistics on tax relief for capital allowances do not distinguish between the amounts allowed for child care purposes and other purposes there is no basis on which a reliable estimate of the impact of these measures or of the numbers involved can be provided.

The Finance Act, 1999, also provided an exemption from a benefit in kind charge where employers provide free or subsidised child care for their employees. The exemption applies where the employer makes a premises available or, if a joint scheme, is involved in both the management and financing of the child care facility.

The potential cost to the Exchequer of exempting child care facilities provided by employers from the benefit in kind charge to income tax was estimated at the time of introduction of the relief to be of the order of £5 million in a full year. As taxpayers are not required to provide details of this benefit in their tax returns there is no basis on which to provide an estimate of the cost to the Exchequer of the tax exemption or of the numbers involved.

I have received a number of pre-budget submissions in relation to the scope of the BIK exemption in respect of certain child care facilities. The suggestions made will be borne in mind in the context of the preparations for the forthcoming budget.