Holly Cairns
Question:315. Deputy Holly Cairns asked the Minister for Finance his views on providing a tax credit for parents and guardians for childcare costs; and if he will make a statement on the matter. [26546/21]
View answerTuesday, 18 May 2021
Questions (315)
Written answers
I acknowledge the continuing cost pressures on parents with young children. In recognition of these pressures, a number of support measures are already in place to ease the burden on working parents. These include various tax-exempted child-care related supports provided by the Minister for Children, Equality, Disability, Integration and Youth and measures such as the Working Family Payment provided by the Minister for Social Protection.
With regard to taxation measures, and separate to the above:
- The Accelerated Capital Allowances scheme for Childcare Services was introduced to encourage employers to develop childcare facilities onsite for their employees.
- Individuals who provide child-minding services in their own home may claim childcare services relief each year, provided that they do not receive more than €15,000 income per annum from the child-minding income.
- Furthermore, a Single Person Child Carer tax credit of €1,650 is available as well as an additional standard rate band of €4,000. This credit and band is payable to any single person with a child under 18 years of age or over 18 years of age if in full time education or permanently incapacitated. The primary claimant may relinquish this credit and increase in the rate band to a secondary claimant with whom the child resides for not less than 100 days in the year.
In relation to taxation more generally, I note the findings of the Interdepartmental Working Group on Future Investment in Childcare in Ireland, which published their report in July 2015. Having considered the option of a tax credit that would be available to those who incur childcare costs, the Group recommended against introducing such a measure. The group had concerns that a tax credit would not be equitable, would have high possible deadweight, could end up being fully absorbed in the cost of childcare, and might not have a meaningful impact on a parent's decision on whether to join or to return to the labour market. Estimates produced at the time also suggested that the annual Exchequer cost of such a measure could be very substantial.
I have no plans, at present, to introduce a specific income tax relief for parents to assist with childcare costs. As the Deputy will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones. In considering these, I must be mindful of the public finances and the many demands on the Exchequer given the current budgetary constraints and the equitable treatment of all tax-payers. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.