Vol. 558 No. 1
195 Mr. Ring asked the Minister for Finance his plans to introduce a tax allowance for cohabiting couples, similar to the married allowance, which would allow one person who is work ing to claim the tax credit of their partner who is not working. [23257/02]
I have no plans at the present time to introduce a tax credit along the lines suggested by the Deputy.
The position is that there are no special tax credits or methods of assessment for unmarried couples living together. In this context, tax law follows the general law relating to marriage. Generally speaking, the basis for the current taxation of married couples derives from the Supreme Court decision in Murphy v the Attorney General, 1980, which held that it was contrary to the Constitution for a married couple to pay more tax than two single people living together. The tax treatment of unmarried couples who cohabit was unaffected by the Murphy judgment. Each partner is taxed as a single person and each is entitled to the tax credits and standard rate band appropriate to single persons.
The issue of the tax treatment of cohabiting couples was examined most recently in the report of the working group examining the treatment of married, cohabiting and one parent families under the tax and social welfare codes. The group, which was established by the Minister for Social Welfare in May 1997, reported in August 1999. The report is available from the Government Publications sale office. The group was sympathetic, in principle, to changes in the tax legislation to address the issues raised relating to cohabiting couples and reported that the options it set out should be considered further.
In budget 2000, I initiated the process of band widening with a view to establishing progressively a single standard rate income tax band for all individual taxpayers. When this process is complete the position of all couples will be the same with respect to the standard rate tax band. The position of married couples in relation to income tax is accorded recognition through the married person's tax credit and the home carer's tax credit. I have no plans to change the arrangements in that regard.
The working group mentioned above acknowledged that a key issue in relation to the tax treatment of cohabiting couples is whether tax law should proceed ahead of changes in the general law on the matter. For that reason, and while I am cognisant of the issues faced by cohabiting couples, I have no plans to extend the married person's tax credit to such couples at the present time.
