As the Deputy is aware, the One-Parent Family Tax Credit (OPFTC) is being replaced with a new Single Person Child Carer Tax Credit from 1 January 2014. The Single Person Child Carer Tax Credit will be of the same value, i.e. €1,650, as the existing OPFTC and will also carry the same entitlement to the extended standard rate tax band of €36,800 per annum. The new credit will be targeted such that it is available only to the primary carer of the child. A maximum of one credit will be available per single carer/claimant, regardless of whether he or she cares for more than one child. This is the same condition that applies to the current OPFTC. Given the difficult fiscal environment it is essential to review all tax reliefs, credits and incentives in order to ensure that they are properly targeted and if necessary re-focused in order that they can achieve the socio-economic objectives that are set for them. A system that allows multiple claims in respect of the same child, as can happen with the OPFTC, is unsustainable.
I am advised by the Revenue Commissioners that based on the most up to date data it is estimated that the expected yield from replacing the One-Parent Family Tax Credit with the Single Person Child Carer Tax Credit from 1 January 2014 will be €18 million in 2014 and €25 million in a full year.
This measure will be implemented via the Finance Bill and thus a Regulatory Impact Assessment (RIA) is not compulsory. In addition, paragraph 2.21 of the RIA guidelines states that ‘the publication of an RIA may not be appropriate in the case of tax law/regulations or the imposition of charges because of their sensitivity and the need to guard against potential evasion or avoidance.’
Furthermore, it is not customary to consult particular groups that may be affected by Budget measures. However, a review of all tax expenditures and reliefs takes place in the run up to annual Budget.
As the Deputy may be aware, the OPFTC was examined by the Commission on Taxation. That Commission accepted submissions as an important source of views in fulfilling their mandate. In addition, it consulted widely with a large number of interested parties in both the private and public sectors, to help in its deliberations. It its 2009 report it acknowledged that the OPFTC plays a role in supporting and incentivising the labour market participation of single and widowed parents. However, in its recommendations it concluded that the credit should be retained but that it should be allocated to the principal carer only. The restructuring of the credit as announced in the Budget will achieve such an outcome.
Qualification for the new credit will depend on whether the individual concerned is the primary carer for the relevant child. Allocation of childcare responsibilities is primarily for parents to agree. Practical implementation issues are being considered as part of the Finance Bill process.