Dáil Éireann Debate, Tuesday - 23 March 2004
155 Mr. J. Higgins asked the Minister for Finance if he will consider introducing tax relief or other incentives to help parents with the excessive burden of child care costs; and if he will make a statement on the matter. [8432/04]
View answerAs the Deputy will be aware, over the past number of years the Government has considered carefully the whole area of child care. The core objective of Government policy in the area of child support is to provide assistance which will offer real choice to parents and which will benefit all children. In that context it has been decided that, as a matter of policy, child benefit will be the main fiscal instrument through which support will be provided to parents with dependent children. Child benefit provides assistance to all parents in whatever caring choices are most appropriate for them and their children. In addition, unlike tax relief, it provides support to parents irrespective of their income status.
In line with this policy approach, the Government commenced a major initiative to substantially increase the rates of child benefit. In 2001, the rate for the first and second child was increased by almost €32 per month and by €38 per month for the third and subsequent children. This represented an increase of over 50% on the rates prevailing in 2000. Similar monetary increases were provided in 2002. Further increases were implemented in 2003 and, in my recent Budget Statement, I announced additional increases of €6 and €8 per month respectively in 2004 which are around double the projected inflation rate for this year. All this means that, since 1997, the child benefit rates have increased by more than 230% compared with a projected increase of inflation of only 28% over the period 1997 to 2004.
In addition, the Government has in place a package of other expenditure measures to support child care needs. The supply of formal child care places throughout Ireland is being stimulated through a programme of investment under the National Development Plan 2000-2006. The equal opportunities programme is making capital grant assistance available with the aim of increasing the supply of quality child care places to address the child care needs of parents who wish to remain in or return to employment, education and training. The programme aims to increase by 50% the supply of child care places by end 2006. The budget for the programme is €436.7 million and is funded by the Government and the European Union. This funding and the recent increases in child benefit are a significant financial commitment and clearly show the Government's continuing support for the child care sector.
Given the Government's policy in this area as outlined above, I have no plans at this time to introduce a specific tax relief for parents in relation to the costs incurred for child care. There is an exemption to the usual benefit-in-kind provisions for employees who have free or subsidised child care facilities provided by their employers. The exemption applies whether the employer provides the facilities in-house or in a premises made available by the employer in another location. The exemption also applies if an employer provides child care facilities jointly with others, for example, other employers.
Furthermore, capital allowances are available for expenditure incurred on child care facilities which meet the required standards for such facilities as provided in the Child Care Act 1991. Child care services are also generally exempt from VAT, so no VAT should be chargeable on fees levied by crèches.
Under the auspices of Sustaining Progress, the Government has committed itself to ensuring, inter alia, that the Department of Social and Family Affairs will review the contribution made by its income support system to people reconciling work and family life and prepare a national programme focusing on the development of family policy and supports to mark the tenth anniversary of the International Year of the Family.
