Michael Healy-Rae
Question:50. Deputy Michael Healy-Rae asked the Minister for Finance his views on correspondence (details supplied) regarding the one-parent family tax credit; and if he will make a statement on the matter. [52460/13]
View answerThursday, 5 December 2013
Questions (50)
Written answers
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 in the first instance, 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. There is no specific tax credit for children in the tax code and married or cohabiting couples are unable to avail of any additional credit to assist them in maintaining their children. This is despite the fact that in certain cases such couples may also have to maintain two households due to the location of employment.
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.
In the first instance, it is the responsibility of the parents to look after a child including financially. The new credit is targeted to assist principal child carers to take up, or remain in employment. It should not be considered merely as a supplementary source of income, or an alternative to the financial support of a parent.
Maintenance payments are a matter for parents and if necessary, the courts to decide. It is not possible, and indeed would not be appropriate, for the tax code to take account of every possible variable.
The Commission on Taxation acknowledged that the One-Parent Family Tax Credit 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 will achieve such an outcome.
Notwithstanding the above, after listening carefully to the views expressed by my colleagues and many Deputies in this matter, I bought forward an amendment to the section at Committee Stage of the Finance (No 2) Bill 2013, which will allow the credit to be used by a non-primary carer in situations, for example, where the primary carer has no tax liability.