Dáil Éireann Debate, Thursday - 23 January 2014
66. Deputy Brendan Griffin asked the Minister for Finance if he will reverse the removal of the one parent family credit in view of the impact it will have on single families who are already struggling financially; and if he will make a statement on the matter. [3444/14]
View answerAs the Deputy is aware the One-Parent Family Tax Credit (OPFTC) has been replaced with a new Single Person Child Carer Tax Credit from 1 January 2014. The restructured credit is of the same value i.e. €1,650 per annum as the OPFTC and it will also carries the same entitlement to the additional €4,000 extended standard rate band, which increases it to €36,800 per annum, before liability to the higher rate of income tax arises. However, the credit will be more targeted, in that it will in the first instance, only be available to the principal carer of the child. A system that allows multiple claims in respect of the same child or children is unsustainable.
I should point out there is no specific tax credit for children in the tax code. Therefore, married or cohabiting couples are unable to avail of any additional credit to assist them in the financial maintenance of their children. In certain cases, such couples also need to maintain two households due to the location of employment, for example. The new credit is designed to be an activation measure, which was the original intention behind the OPFTC. It is designed to be an in-work benefit to support the primary carer to take up, or remain in, employment. It should not be considered as a supplementary source of income, on which the financial support of a parent depends.
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. Where a primary carer chooses to relinquish the credit, a secondary carer can make a claim for it provided they meet certain conditions.
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. Therefore having completed such an exercise in relation to the OPFTC, I am not minded to reverse the legislative provisions that were approved by the Oireachtas as part of the Finance (No. 2) Act 2013.
