Dáil Éireann Debate, Tuesday - 24 October 2017
93. Deputy John Curran asked the Minister for Finance the estimated cost of extending the tax credit to all households in view of the fact that the home carer tax credit is not paid to those earning under €29,000; and if he will make a statement on the matter. [44913/17]
View answerThe Home Carer's Allowance (as it was then) was introduced in Finance Act 2000, in the context of a move to the partial individualisation of the income tax system. Such a system limits the transferability of tax bands and credits from a non-earning spouse to the earning spouse, with the stated economic objectives of increasing labour force participation among secondary earners and reducing the numbers of workers paying the higher rates of income tax.
In tandem with this move towards an individualised tax system, and in order to ensure a balance was maintained between those going out to work and families with caring responsibilities in the home, a Home Carer’s tax allowance was introduced for married one-income families where one spouse works primarily in the home caring for children, the aged or incapacitated persons.
This allowance was subsequently converted into the Home Carer Tax Credit (HCC), and the Deputy will be aware that, in Budget 2018, I announced that the HCC, which is of benefit to over 80,000 families annually, is being increased from €1,100 to €1,200 per annum. This follows from an increase in last year’s Budget from €1,000 and an increase from €810 in Budget 2016 giving a total increase in the credit over the last three Budgets of €390.
With regard to the Deputy’s proposal to extend the credit to all households, I note that the Deputy’s question does not define household for this purpose – for example it is not clear if the Deputy envisages extending the credit to single person households, single parent households and/or double income households. In this regard, I would note that extending the credit to households other than single-earner households with caring responsibilities in the home would run counter to the policy rationale underpinning the credit since its introduction.
As with all tax credits, the HCC has the potential to be of benefit only to qualifying recipients with sufficient levels of taxable income to absorb the credit. For example, a single-income, PAYE earner family will see a benefit from the HCC where household income exceeds €24,750, as income of up to this amount can be sheltered from tax by the married personal tax credit of €3,300 and the PAYE tax credit of €1,650. The basis for the figure of €29,000 stated in the Deputy’s question is unclear, however I would note that there would be no cost, and no associated benefit for the relevant individuals, of extending a tax credit to households that do not have sufficient taxable income to utilise it.
