Dáil Éireann díospóireacht -
Tuesday, 29 May 1990

Vol. 399 No. 3

Written Answers. - Child Tax Allowance.

Jim Mitchell

Ceist:

47 Mr. J. Mitchell asked the Minister for Finance the last year in which a child tax allowance was paid in respect of dependent children of those on PAYE; the amount of the allowance per child; the total number of children for which the allowance was claimed and the cost of the allowance; if he will indicate the amount of the child allowance payable at the same rate this year updated for inflation; the estimated number of children to whom dependant's allowance could be claimed this year; and the total cost of reinstating the allowance.

Minister for Finance (Mr. A. Reynolds)

The child income tax allowance, which was available to all qualifying taxpayers whether self-employed or taxed under PAYE, was withdrawn with effect from 6 April 1986. Before its withdrawal, the allowance stood at £100 per qualifying child. The cost of the allowance to the Exchequer for the 1985-86 tax year, the last year for which it was available, is estimated at about £30 million in respect of claims affecting some 734,000 children.

The current value of the allowance when adjusted for inflation by reference to the consumer price index would be about £117. The cost of restoring it at that level in the current tax year is estimated at about £26.5 million in a full year in respect of some 666,000 children.

As the Deputy will recall, the revenue from the abolition of the child tax allowance in 1986 was used, along with other moneys, to fund the introduction of child benefit, in place of the previous children's allowances schemes, at a rate sufficient to compensate standard rate taxpayers, then paying tax at 35 per cent, for its loss. The Government have announced that the rate of child benefit is to be increased by 5 per cent from October next; this incease will cost an estimated £10 million in a full year. The Deputy will also be aware that in 1989 I introduced a child addition of £200 per qualifying child in conjunction with the income tax exemption limits, and increased it to £300 this year; the purpose of the addition is to benefit low-paid taxpayers with family responsibilities.