Dáil Éireann Debate, Tuesday - 29 September 2020
33. Deputy Marian Harkin asked the Minister for Finance if he will use budget 2021 to extend eligibility for the home carer tax credit to include single working carers and allow carers to claim tax relief on the cost of employing a care worker while also claiming the dependent relative or incapacitated child tax credit; and if he will increase the dependent relative tax credit in line with the incapacitated child tax credit. [26674/20]
View answer271. Deputy Colm Burke asked the Minister for Finance if consideration will be given to increasing the dependent relative tax credit in line with the incapacitated child tax credit in order that this tax relief can be made available to all full-time carers regardless of their relationship to the cared-for person; and if he will make a statement on the matter. [26417/20]
View answer272. Deputy Colm Burke asked the Minister for Finance if consideration will be given to the extension of eligibility for the home carer tax credit to include single working carers who, in cases, work part time while also caring for a dependent person; and if he will make a statement on the matter. [26418/20]
View answer273. Deputy Colm Burke asked the Minister for Finance if consideration will be given to allowing carers to claim tax relief on the cost of employing a care worker while also claiming the dependent relative or incapacitated child tax credit; and if he will make a statement on the matter. [26419/20]
View answerWill the Minister use budget 2021 as an opportunity to extend the home carer tax credit to single, or lone, family carers, who cannot avail of it at present? Will he also consider allowing carers to claim tax relief if they employ a care worker while, at the same time, they can avail of the incapacitated child tax credit or the dependent relative tax credit?
I have a third question but the Minister will have received it in writing.
I propose to take Questions Nos. 33 and 271 to 273, inclusive, together.
Consistent with the programme for Government, it is not the intention to increase the value of income tax credits or bands in budget 2021. I note, however, that the Deputy raised three separate but related issues regarding important measures in the tax code that support caring for people in vulnerable circumstances.
Regarding the suggestion to extend eligibility for the home carer tax credit to include single workers, this credit was introduced in Finance Act 2000 specifically in the context of a planned move to full individualisation of the income tax system to ensure a balance was maintained for married one-income families where one spouse works primarily in the home caring for children, the aged or incapacitated persons. The home carer tax credit is, therefore, available only to jointly assessed couples in a marriage or civil partnership and not to single persons, as the issues the credit sought to address do not arise in their circumstances. Instead, the single person child carer credit of €1,650 and an increased rate band of €4,000 are available to single parents with caring responsibilities for a dependent child who is under the age of 18 or, if over 18, is an incapacitated child who satisfies the incapacitated child tax credit criteria.
As for the question of claiming tax relief on the cost of employing a care worker while also claiming the dependent relative or incapacitated child tax credit, there is no restriction on this and the tax relief is available at the individual’s marginal rate of tax.
I will outline further information in my follow-up response.
There is a considerable anomaly here. If a single carer, such as a widow or widower or someone who is divorced or separated, cares for a sister or mother, the carer cannot avail of the credit. Perhaps the person is doing it full time, or works eight hours part time for sanity or just to keep heat in the house. He or she cannot avail of the home carer tax credit. That is fundamentally unjust. I understand why it was put in place in the first instance, because it was intended that one person would work outside the home and the other predominantly in the home, but that second person could have part-time work. The Government is saying, therefore, that for two people who are jointly assessed, one can work outside the home, while the other can have part-time work and still claim that credit, whereas someone who is a lone carer, for whatever reason, cannot claim that credit and work outside the home.
While I know the Minister has said he will not increase tax bands or credits, that is a serious anomaly in its own right.
I will definitely consider the different issues the Deputy has raised. I appreciate that in any tax credit such as this, that is targeted and that is looking to support those who are doing important work in our society and for their families and so on, anomalies can be generated by it at times and I will look at the issue the Deputy has raised. I want to make the point that, for example, if we were to raise the dependent relative tax credit to €3,300, it is estimated that the additional cost for that would be €194 million. That is not to seek to diminish the value of the work that is being done. It is just to acknowledge the financial cost that would be involved in doing that. I will consider the observations the Deputy has made around those anomalies but I have to be open with her on the fact that the options for me for changing any credits in the upcoming budget are limited.
I appreciate the Minister's acknowledgement that there is an issue and that he will come back to it at some point. In the context of more people working from home or doing blended working, this issue will arise more. Also, some people need a few hours outside of the home for their mental health and sanity. Those people would not be able to get the home carer tax credit. As I said, it is fundamentally unjust. I know the legislation was not put in place with that perspective in mind but as the Minister and I both know, sometimes unintended consequences happen and that is, perhaps at best, what happened here. The Minister mentioned the dependent relative tax credit and the cost of same and I accept that but the Minister and I both know that family carers save the State huge amounts of money every year and that needs to be factored into any decision. I thank the Minister for his acknowledgement that he will look at this.
The Deputy has pointed to a number of potential anomalies and issues, which she has explained to me in the question she has put forward. I have looked to explain why the tax credit is at the level it is and I have noted what the financial cost would be in any such change. As I have already said to the Deputy, I am acknowledging the financial cost involved in a change such as this. In doing that, I am not looking to diminish the incalculable value of those who are caring for those in their families or communities who need care. As I have said to the Deputy, in order genuinely to manage expectations around this issue in the approaching budget, the ability to make changes to tax credits or rates or to any personal tax measure that would be relevant to this House is limited in the context of this budget for all of the reasons Deputies know.
