The proposals by the Irish Hotels Federation to introduce a new £2,000 tax allowance which it refers to as the homemakers Revenue job assist have been received by my Department. The proposals appears to be aimed at encouraging non-earning spouses, which in current labour market conditions are predominantly women, back into the workforce.The proposal also envisages the retention of existing social welfare and medical card benefits.
These proposals, along with other proposals for new or increased tax allowances and reliefs, will be examined in the run-up to the budget. Deputies will appreciate that it would be difficult for reasons of equity to restrict any such new allowance to persons taking up employment in a particular sector. Similarly, I have concerns about the feasibility of restricting any new allowance to persons over a certain age. There is also the position of those persons already employed to consider who may regard it as unwelcome that new employees only should receive such allowances.
The Government is committed to reducing the burden of personal taxation to reward effort and improve the incentive to work. The reductions in tax rates in my first budget, together with the major reform introduced in the last budget, have considerably reduced the burden of taxation, particularly on the lower paid, and this will undoubtedly improve the incentive to work. The income tax changes in the last budget removed over 80,000 taxpayers from the tax net.
Deputies will recall that in the 1998 budget I announced a new tax-based employment incentive known as the Revenue job assist. This new scheme is a focused, two-part initiative which gives the long-term unemployed an incentive to take up employment and gives potential employers an incentive to employ a long-term unemployed person as opposed to someone else in the labour market. The scheme is a temporary allowance which is phased out over three years and is designed to help the long-term unemployed bid themselves back into work.
The Irish Hotels Federation's proposal, while lasting three years, is not reduced during that period, and could give extra tax-free income to households who already have a substantial family income. However, I will examine this proposal for the next budget.