Dáil Éireann Debate, Tuesday - 15 October 2013
22. Deputy Gerald Nash asked the Minister for Finance if he or the Revenue Commissioners have undertaken research into the area of making child care deductible for tax purposes; if he has considered such a measure; and if he will make a statement on the matter. [43093/13]
View answerI understand that comprehensive analysis of the options to support the provision of affordable and accessible child care was undertaken in 2005. Having considered the options available, the then Government introduced the early child care supplement, providing a direct payment to all families with young children. In addition, certain other incentives were introduced in order to encourage an increase in the supply of child care places. At that time, tax relief for child care costs was considered but not introduced, as it would only have been of benefit to those in the tax net and would most likely have been absorbed by child care providers in the form of higher prices. Analysis showed that a standard rated child care costs allowance of €4,000 per annum would cost the Exchequer €64 million per annum and would have resulted in a reduced liability to income tax of only €15 per week for those availing of it.
The Deputy will be aware that the early child care supplement has since been abolished as the measure was very costly, poorly targeted and possibly led to increased charges. In its stead, the Early Childhood Care and Education (ECCE) programme, which provides for a free preschool year for children in the year before commencing primary school, was introduced. In my view the concerns raised in the 2005 analysis regarding tax relief for child care costs are still valid. This is particularly the case considering the major changes in the economy that have occurred in the intervening period. Furthermore, I would have concerns about basing any analysis of the cost of making child care tax deductible on data provided in reports that were compiled eight years ago.
Notwithstanding the absence of tax relief for child care costs, the Government acknowledges the continuing cost pressures on parents, particularly those with young children. For this reason a number of support measures are available. These include, (i) the Community Childcare Subvention (CCS) programme, which funds community child care services to enable them to charge reduced child care fees to qualifying parents, (ii) the Childcare Education and Training Support (CETS) programme, which provides free child care places to qualifying FÁS and VEC trainees and (iii) the Early Childhood Care and Education (ECCE) programme which provides for a free preschool year for children in the year before commencing primary school. In addition, generous entitlements to paid and unpaid maternity leave are provided, as well as child benefit payments.
