Billy Timmins
Ceist:339 Mr. Timmins asked the Minister for Finance the position in relation to couples who are cohabiting; if there are plans to change this; and if he will make a statement on the matter. [19621/03]
Written Answers. - Tax Code.
Tony Gregory
Ceist:385 Mr. Gregory asked the Minister for Finance his plans to deal with the anomaly whereby an unmarried partner gets no tax relief for their dependent partner while their earnings are taken into account when assessing the dependant for social welfare; and if he will make a statement on the matter. [21036/03]
I propose to answer Questions Nos. 339 and 385 together.
There are no special income tax allowances for unmarried couples living together. In this context, I would point out that 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 vs 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 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.
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.
As the Deputies will be aware, the tax treatment of cohabiting couples was last examined comprehensively 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 that it set out should be considered further.
The working group 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.
The treatment of married and cohabiting couples under the social welfare code is primarily a matter for the Minister for Social and Family Affairs.
Question No. 340 answered with Question No. 148.