Michael Noonan
Ceist:27 Mr. Noonan asked the Minister for Finance the proposals, if any, he has to introduce a tax allowance of £3,000 for certain spouses working in the home; and if he will make a statement on the matter. [27167/99]
Priority Questions. - Tax Allowances.
I announced on Wednesday, 8 December 1999 that the Government has decided to bring forward a £3,000 per annum tax allowance at the standard rate of tax in respect of spouses of married one income families who work in the home caring for children, the aged or handicapped persons. This fulfills a promise made by the Government in the joint Fianna Fáil and Progressive Democrats statement issued prior to the June 1997 General Election of an allowance, then set at £2,000, for families in these circumstances.
This undertaking was always on the list of measures to be pursued in the Government's two remaining budgets but has been implemented now to recognise the role of spouses who work in the home and to balance the tax relief measures announced in the budget on 1 December 1999 which addressed the position where both spouses were in paid employment.
The specific details of the operation of the scheme will be set out in the Finance Bill to be published next February. This tax relief will be worth up to £660 per annum to one income married families on the standard and higher rate of tax at all income levels but will be of greater proportionate value to lower income families because it is standard-rated. The full year cost is estimated at £125 million.
Does the Minister realise that five minutes ago he informed the House there was no lack of balance in the budget, while now his primary explanation for the introduction of this allowance is to give balance to the budget?
I said clearly I do not accept there is a lack of balance in the budget.
In the text of the Minister's reply he says the £3,000 allowance is brought in to balance the other measures of the budget. Which answer is the correct one, or do his officials read the answers any more?
As the Taoiseach said on Thursday 2 December, which I repeat now and in the reply, as we move the individualisation process forward in 2002 and 2003—
That is not what the Minister just said in his reply. He should read his reply.
The Deputy should address his remarks through the Chair.
I know exactly what I said. There was a need to address any imbalance that there might be at that particular stage and on account of the perceived difficulties, as I said, arising from my Budget Statement on 1 December regarding the individualisation process and the perceived lack of balance between the single, one income family and the double income family. I brought forward the measures I intended for the two subsequent budgets to address that perceived imbalance.
What level of income, earned or unearned, will the spouse at home be allowed to have before the other spouse is disqualified from this allowance?
It will be a matter for the Finance Bill, but the Deputy should not forget that the allowance will be given to all stay-at-home carers for the handicapped, children or the elderly. Income does not come into it.
If the spouse has a part-time job, will income come into it?
If the person has a part-time job, there are many further procedures that will allow them both to earn £17,000 in the individual bands which I announced in the budget. The Deputy must understand that the budget—
I understand the budget. If the person has other income from rented property or credit union dividends, will that disqualify him or her?
It depends on the income the person will have.
That is what I asked. How much?
It depends. At the moment it is intended that the married couple with a carer living at home does not hit the rate of tax until they earn in excess of £28,000.
That is not the question.
I am answering the question.
This is about the £3,000 allowance.
The allowance will be granted to the stay-at-home spouse who cares for children, the handicapped or the elderly.
Provided she has not other income.
No, it will not work like that. The total amount of income at the time will be taken into account. Any questions regarding qualification or disqualification can be considered in the Finance Bill, but it is intended to grant the stay-at-home allowance of £3,000 at the standard rate to persons who care for children, the elderly or the handicapped.
It is clear to me the Minister has not thought this out at all and it has probably only come into his head now.
Acting Chairman
The Deputy should put his questions through the Chair.
Why did the Minister feel it necessary to attach a caring function, such as the care of children, to make a person eligible for the £3,000 allowance, but when he proposed the individualisation plan it applied to all double earning couples, regardless of whether they had children or not?
I discount what the Deputy said earlier about us not thinking about this matter, as it was debated ad nauseam by the Fianna Fáil parliamentary party prior to the 1997 election. What was announced last week is a direct cog from the election statement issued by Fianna Fáil and the Progressive Democrats on 4 June 1997, no more or no less. There was considerable debate in the Fianna Fáil parliamentary party earlier in 1997 when the commitment was to a £2,000 standard rate allowance to stay-at-home spouses who looked after children. That commitment was firmed up on 4 June 1997 to include stay-at-home spouses looking after children, the handicapped and the elderly. Nobody in the Fianna Fáil party could complain that there was an inadequate debate on this matter, given the long debate on it in 1997. The announcement last Thursday was an exact translation of the 1997 statement, though it was brought forward.
They will be on the plinth again after today.