Dáil Éireann díospóireacht -
Tuesday, 25 Nov 2014

Vol. 859 No. 1

Finance Bill 2014: Report Stage

Amendment No. 1 not moved.

Deputy Pearse Doherty

I move amendment No. 2:

In page 11, between lines 18 and 19, to insert the following:

"3. The Minister shall, within 3 months of the passing of this Act, prepare and lay before Dáil Éireann an analysis of the tax changes in this Act, and the total of tax changes and spending adjustments of Budget 2015, setting out the continuing impact on people based on their gender, income, age, marital and disability status.".

We discussed at a meeting of the finance committee Sinn Féin's long-term policy of having equality budgeting at the heart of what we do in Leinster House and across the island. There has been growing momentum in this regard among campaign groups and advocacy groups dealing with people at the coalface. They demand equality budgeting and believe it is a practice that the Government should not fear and that it is very necessary.

As the Minister knows, my party has published legislation in this area. He and his colleagues in the Labour Party have voted against it. At the time of the vote, however, there was a suggestion that the Government would introduce some type of equality budgeting, but it has not materialised. I heard the Minister's comments on Committee Stage to the effect that the analysis at the back of the budget book of the financial circumstances of couples, including couples with children, and various other earning groups is a form of equality budgeting and a means of outlining the impact on certain people in society. This is a far cry from what is suggested in the Sinn Féin legislation and the amendment before the House tonight. The amendment is about ensuring that the continuing impact on people based on their gender, income, age, marital status and disability status will be assessed before and after any major budgetary decisions. Equality budgeting should not be just an issue in terms of the budget itself because, when dealing with big policy areas, we should be always conscious of the impact on various sections of society.

This amendment is a very clear attempt by my party to make equality budgeting a standard part of budgeting each year. There is nothing really to fear but the Government obviously fears something in respect of putting equality budgeting at the heart of its assessments of the impact of various sectors. This is clear from its taxation measures. Euro for euro, the biggest benefits rest with the higher income groups as opposed to those on the average industrial wage, the minimum wage, or less. When one takes into account factors such as the water charges that are coming down the line and other pressures, one realises those with a very low disposable income will feel the brunt of the budget the most.

I commend the amendment to the House. I am not confident the Government will accept it given its track record in equality but my party and I feel very strongly about it.

Deputy Michael McGrath

As the Minister knows, this broad area will be the subject of a three-hour debate tonight and tomorrow night by way of a Private Members' motion tabled by the members of the Technical Group. The Government's counter-motion makes reference to what appears to be a new initiative. I hope the Minister can set out what that means. The counter-motion states a social impact assessment of the main tax and welfare measures will be carried out by a cross-departmental body led by the Department of Finance, the Department of Public Expenditure and Reform and the Department of Social Protection before the publishing of budgets. Will the Minister elaborate on what that means? When he does, we might make some progress on the issue.

Deputy Stephen S. Donnelly

I support the amendment. I would go further and say that while it is useful to have it a few weeks after the budget, there is no technical reason the Dáil should not be presented with equality budgeting on the day of the budget. I acknowledge that the relevant committee has recently been to Scotland to examine its model, which is viewed by people in this area as best practice. I hope we can see some movement on this on very quickly.

Minister for Finance (Deputy Michael Noonan)

I thank Deputy Pearse Doherty for tabling this amendment. In the debate on Committee Stage, I indicated that a substantial amount of analysis governing some of the groups the Deputy mentioned has been already published by the Department of Finance, or is due to be published in the coming months by Departments and other organisations. As such, I will avoid covering this ground again.

The Deputy noted the wide-ranging impacts of budgetary measures on social groups and difficulties in aggregating these disparate impacts on particular social groups. From my Department's perspective, a significant proportion of policy measures is covered by the SWITCH model. I am informed that the ESRI has been recently investigating how the model could be expanded to include other areas of policy, such as policy on indirect taxes. In addition to these tax items, the same model is being expanded to cover issues concerning housing and medical cards. The Deputy can appreciate the significant resources that need to be invested in the model to incorporate these effects, as well as the importance of these policy issues in Ireland at present. When included in the model, the measures will allow the simultaneous measurement of the impact of different policy areas on members of society by income, family status and economic status. It is not currently analytically possible within SWITCH to assess the impact of budgets on groups of people based on their marital or disability status. As I believe I have made apparent, there are already significant efforts under way to expand the capacity of the model to cover key issues currently affecting Ireland. Expanding the capacity of the model to include impacts on marital status, for example, would limit the ability to achieve the goals.

There are trade-offs that need to be borne in mind when it comes to thinking about the best way to expand the capability and coverage of the SWITCH model. It is essential to identify priorities among the many desirable improvements that one would wish to see in the modelling framework. However, as the Deputy may be aware, research by the ESRI indicates that budgets from budget 2009 to budget 2013 did not have a significant differential impact on people based on their gender. This reflects the fact that the tax and social welfare systems do not discriminate based on gender. Further versions of the SWITCH model may include gender-based analysis.

On the basis that the analysis proposed in the amendment is already published, or is due to be published, and given the infeasibility of aspects of the amendment, I cannot accept it. Deputy Michael McGrath has rightly drawn attention to the fact that the Technical Group has tabled a motion for tonight that covers some of the same ground referred to by Deputy Doherty.

There is a counter-motion tabled by the Government and there will be a further explanation of what is in mind tonight. It would not be appropriate for me, at 6.40 p.m., when a debate is scheduled for 7.30 p.m., to give a preview. However, the Deputy is correct. There is an initiative being taken which will further improve the general proofing of budgets. I thank the Technical Group for its lengthy proposal and I hope it will be pleased with the Government's response to it.

Deputy Pearse Doherty

I put it to the Minister that this is the time and place to discuss this issue. A person democratically elected to this House has tabled an amendment to legislation that is to pass through this House this evening and this is when we are debating it and hearing the Government's response. A year and a half ago, legislation on equality budgeting was produced by my party and at that time the Government's response was that an initiative would be taken to bring forward its own equality impact assessment of budgets, etc. When the Independent group brings forward not legislation, but a detailed motion on the matter, there is more movement from the Government but a repeat of the assertions that were made during the debate a year and a half ago.

Today there is a Bill. This is where we put it into law. Whatever is said during Private Members' time in the Dáil by the Government, there is no requirement on the Government to follow through. There is no protection, for example, for women or persons with disabilities, to have recourse to the legal mechanisms of the State to assert that the Government acted unlawfully in introducing a budget in 2015 or 2016 without carrying out an equality impact assessment. That will not emerge as a result of the motion that may be passed in the next 48 hours following acceptance of the amendment that the Government puts forward. If we were to put it into legislation tonight, however, then we would see something very different.

I am disappointed. If the Minister thinks that something substantial will happen, I will welcome it. However, for the reasons that I outlined earlier, I would like to see the legislative basis for something of that nature. As for what I have heard so far from the Minister, I am mindful that he is holding back to see what his colleague will say later on this evening when this amendment on the Bill will be dispensed with and there will be no opportunity to deal with it again.

Regarding the Minister, Deputy Noonan's contribution on Committee Stage, before the Government was forced into tabling a counter-motion, the argument he put forward was that equality budgeting is included already in the budget book, which is the height of nonsense. The analysis, in the case of Sarah and Mick, etc., and the impact that the provisions would have on different income sectors is not the type of equality budgeting that we would have and the reliance on information, such as that of the ESRI, that tax has not had an impact, in particular, on gender, may or may not be accurate. What we are talking about here is an overall assessment of the impact on budgets on certain groups. In the period the Minister talked about, 2009 to 2014, I would contend that the issue of child benefit payments, that were cut continually by the Government, impacted on a section of society which was female. Other issues include the taxation of maternity benefit and the other changes to maternity benefit. The respite grant payment also predominantly goes to females, who are largely the carers in society. I would contend that there has been more of an impact on females than on males, and there were other such measures in different budgets. That is something that equality budgeting would pick up on. It is not something that the ESRI is picking up on because it deals with tax measures, but one must look at it in the round.

I am disappointed, to say the least, that we do not have a legislative basis for equality budgeting. I will listen carefully to what the Minister's colleague will say, but I hope it is more than what was said a year and a half ago. As I said to the Minister previously, this Government's record on equality and equality budgeting is a disgrace. If we are to see equality budgeting, the Minister will be in his fifth year before it is introduced. There was no reason that it was not introduced before the budget. If the Government is committed to introducing equality budgeting, then let us have an assessment of this budget in terms of the different sections of society and let us have a debate about what are they right groups of individuals that we should be assessing.

Deputy Michael Noonan

I already dealt fully with Deputy Pearse Doherty's amendment and stated I am not accepting it on this occasion.

As I mentioned, one of the reasons I brought forward this issue is that the ESRI recently published a gender analysis of the budgets from 2009 to 2013, inclusive. This analysis, which was funded by the Equality Authority, was exploratory and required significant resources to extend the capability of the SWITCH model to analyse this issue. It would require further significant resources to fully implement in the model the capacity to carry out analysis of budgets in this regard. However, it showed that those budgets did not particularly disadvantage anyone because the social welfare code and the tax code have been gender blind for a long time.

On the separate issue of the Private Members' debate tonight, I replied to the remarks made by Deputy Michael McGrath. It has been custom and practice, and, indeed, it has been governed by a Standing Order for a long time, that when we know there is imminent business we do not try to pre-empt it by having a preliminary discussion which takes away the advantage from the proposers of a particular motion. Private Members' time is less than an hour away and the Government will reply here through its spokesman later this evening.

Deputy Pearse Doherty alleged twice that the Government's record on equality - from the context, he is talking about equality between men and women - is poor. That does not stand up to any analysis on a day when a woman has been appointed Garda Commissioner and the recommendation to appoint her was from a woman Minister for Justice and Equality. When the Attorney General, the Chief Justice, the DPP and the chairman of the new police authority are women, it is hard to argue that the Government has not made significant progress in the advancement of women and in removing the glass ceilings which kept capable women from reaching their full potential for so many years. I reject the Deputy's allegation out of hand. Very significant progress on equality issues has been made by this Government.

Deputy Pearse Doherty

The Minister will know well that the women he mentioned in his response are not the women I am addressing in terms of equality budgeting. I wish each one of those women well in the posts they hold, but each one of them is in a well-paid position for the responsibilities and duties they will carry out on behalf of the State. They are not the ones who need equality budgeting to be enshrined in law to ensure they are protected. Although I am not privy to their salary, few of those women would be earning less than €100,000. That is not what we are talking about. What we are talking about is the Minister's record on inequality.

I refer to the consistent cuts, for example, in Traveller education and support, in tackling the scourge of drugs, in particular, in the capital city, in services for people with disabilities and access to front-line services. I also refer to taking away the medical card from children with life-limiting conditions. These are the types of issues on which the Government has earned an F grade in terms of equality. I do not refer to the fact that the Government appointed women to some of the highest levels of authority in the State. This is not about gender equality; it is about budgeting equality. It is about how the decisions the Minister has taken impact on certain sections of society. While these might be small in terms of the overall magnitude of cuts and tax increases that have taken place, they affect key areas. Some of the most deprived groups in society had very little to start with, but were left with less as a result of these cuts. That is something that should have been targeted, challenged and identified as a result of equality budgeting. I stand over my argument on equality budgeting.

The Minister outlined a clear and rational position to the effect that there is a motion before the House and it is standard practice that we give the proposer of the motion the due courtesy of hearing the response to it. That is fine. It is right and proper that the Minister would afford such a courtesy to the Technical Group, the proposers of the Private Members' motion that will be debated later. I only wish the Minister would afford me the same courtesy, because I put forward the proposal before the Technical Group. We are dealing with two different issues. My amendment seeks to have a legislative basis for equality proofing of this year's budget. This is the time and place for the debate on the amendment that is before the House, but for some reason the Minister does not wish to inform me of what he plans to do next year with the budget or with this budget because I am not due the same courtesy from him as is the Minister for Finance, in terms of my amendment which is before the House and on which we will vote in the coming minutes. I am not deemed worthy of the same type of regard the Minister will rightly afford to the Technical Group proposers. I wonder why I am not.

There is a weakness in the Minister's argument because when Private Members' motions are put forward, one of the first things that happen is the Government briefs the media about what it intends to do, approximately two days' before the debate, to take the sting out of the tail. The Government's response to the motion is usually in the Sunday newspapers three days before the proposal is debated. If memory serves me, our proposal for equality budgeting was the script that ran at that point. I am disappointed no legislative basis is being afforded to equality budgeting at this point. As a result of that, and the Minister's comments, I have no option but to press the amendment.

Deputy Michael Noonan

Could I have an opportunity to reply to the allegations made?

Acting Chairman (Deputy Bernard J. Durkan)

It is not provided for, but if the Minister wishes to make a brief reply, I will allow him to do so as I allowed a certain latitude to the Deputies opposite.

Deputy Michael Noonan

I understood that the Deputy's position on equality is that all women are created equal and that all men are created equal and that we should ensure under our laws that men and women are created equally as well. I did not understand that he had a more restricted definition of equality where only those subgroups selected by Sinn Féin are to be treated equally and it is not a general principle he is enunciating. I replied fully to his amendment. I do not understand why he has a personal grievance about it. We are not legislating in this Finance Bill along the lines of the amendment proposed by the Deputy, but as Deputy McGrath has pointed out, there will be a policy statement later this evening and if legislation is required to fulfil the objective of the policy statement, it will be put in place in due course.

Amendment put: The Dáil divided: Tá, 37; Níl, 72.TáNílAdams, Gerry.

The Dáil divided: Tá, 37; Níl, 72.

Tá

• Adams, Gerry.
• Boyd Barrett, Richard.
• Broughan, Thomas P.
• Calleary, Dara.
• Collins, Joan.
• Collins, Niall.
• Colreavy, Michael.
• Coppinger, Ruth.
• Creighton, Lucinda.
• Daly, Clare.
• Doherty, Pearse.
• Donnelly, Stephen S.
• Dooley, Timmy.
• Ferris, Martin.
• Halligan, John.
• Healy, Seamus.
• Healy-Rae, Michael.
• Kelleher, Billy.
• Kirk, Seamus.
• Mac Lochlainn, Pádraig.
• McConalogue, Charlie.
• McDonald, Mary Lou.
• McGrath, Finian.
• McGrath, Mattie.
• McGrath, Michael.
• McLellan, Sandra.
• Moynihan, Michael.
• Ó Caoláin, Caoimhghín.
• Ó Fearghaíl, Seán.
• Ó Snodaigh, Aengus.
• O'Brien, Jonathan.
• O'Sullivan, Maureen.
• Shortall, Róisín.
• Smith, Brendan.
• Stanley, Brian.
• Timmins, Billy.
• Wallace, Mick.

Níl

• Barry, Tom.
• Burton, Joan.
• Butler, Ray.
• Buttimer, Jerry.
• Byrne, Eric.
• Cannon, Ciarán.
• Carey, Joe.
• Coffey, Paudie.
• Collins, Áine.
• Conaghan, Michael.
• Conlan, Seán.
• Connaughton, Paul J.
• Conway, Ciara.
• Coonan, Noel.
• Corcoran Kennedy, Marcella.
• Creed, Michael.
• Daly, Jim.
• Deasy, John.
• Deering, Pat.
• Doherty, Regina.
• Dowds, Robert.
• Doyle, Andrew.
• Durkan, Bernard J.
• English, Damien.
• Farrell, Alan.
• Feighan, Frank.
• Fitzpatrick, Peter.
• Griffin, Brendan.
• Hannigan, Dominic.
• Harrington, Noel.
• Harris, Simon.
• Hayes, Tom.
• Heydon, Martin.
• Howlin, Brendan.
• Humphreys, Heather.
• Humphreys, Kevin.
• Keating, Derek.
• Kehoe, Paul.
• Kenny, Seán.
• Kyne, Seán.
• Lawlor, Anthony.
• Lynch, Ciarán.
• Lynch, Kathleen.
• Lyons, John.
• McCarthy, Michael.
• McEntee, Helen.
• McFadden, Gabrielle.
• McGinley, Dinny.
• McHugh, Joe.
• McNamara, Michael.
• Maloney, Eamonn.
• Mitchell O'Connor, Mary.
• Murphy, Eoghan.
• Nash, Gerald.
• Neville, Dan.
• Nolan, Derek.
• Noonan, Michael.
• O'Donnell, Kieran.
• O'Donovan, Patrick.
• O'Dowd, Fergus.
• O'Mahony, John.
• Perry, John.
• Phelan, John Paul.
• Rabbitte, Pat.
• Ring, Michael.
• Stagg, Emmet.
• Stanton, David.
• Tuffy, Joanna.
• Twomey, Liam.
• Wall, Jack.
• Walsh, Brian.
• White, Alex.

Tellers: Tá, Deputies Jonathan O'Brien and Pearse Doherty; Níl, Deputies Emmet Stagg and Paul Kehoe.

Amendment declared.

Acting Chairman (Deputy Bernard J. Durkan)

Amendment No. 3 arises out of Committee Stage proceedings.

Deputy Michael McGrath

I move amendment No. 3:

In page 11, between lines 18 and 19, to insert the following:

“Report on home carer’s tax credit

3. The Minister shall, within 3 months of the enactment of this Act, bring forward a report on the costs and benefits of the home carer’s tax credit.”.

We debated at some length on Committee Stage the income tax package announced in the budget last month. One cohort of people whom I highlighted is that of single income couples who may be married couples or civil partners, whose income falls just below the threshold for entering the higher rate of tax, for example, a couple with just one person working where the household income is in the region of €40,000 or €41,000. They are benefitting from the budget to the tune of €174 by virtue of the changes to the universal social charge but they are not benefiting from the other two elements of the Minister's tax-cutting package, which are the extension of the lower rate band and the reduction of the marginal rate of tax.

I made the point on Committee Stage that couples in this category are among those who are really struggling. Their incomes are above all the eligibility thresholds for a medical card, rent supplement and various social welfare entitlements, yet they are benefiting to the tune of only approximately one quarter, compared to a person earning €70,000 who is gaining by almost €750. This is a gain of €750 for someone on €70,000 or more, as opposed to €174 of a gain for a single income couple earning €40,000 or €41,000.

The Minister acknowledged on Committee Stage that tweaking the entry point for the marginal rate of tax and cutting the top tax rate results in anomalies. In my view this is a significant anomaly. I am raising the issue by means of the vehicle of the home carer's tax credit which was introduced in 1999, some 15 years ago, and which is set at the rate of €850 per annum.

It is there to benefit one income couples, where one spouse or civil partner stays at home to mind a dependant person, who generally is a child. The Minister could use this vehicle to iron out the anomalies created by way of the tax package.

Deputy Michael Noonan

I thank Deputy McGrath for the amendment. The system of individualisation has been in the tax code since it was introduced by the former Minister, Charlie McCreevy, in 1999. It is now integral to the overall system. When first announced, the stated purposes of individualisation were, essentially, to ease the burden on single persons, 65% of the workforce; to take workers on the average industrial wage out of the higher rate of tax; and, more generally, to facilitate a reduction in the numbers paying tax at the higher rate. Prior to this, a second spouse faced the marginal rate of tax on the first euro, or punt as it was then, earned. In tandem with individualisation, a home carer's allowance was introduced to compensate couples where one spouse stays at home to care for children or other qualifying individuals. As the Deputy may recall, there was a major row about individualisation and the allowance was introduced subsequently. The arguments I have outlined for the Deputy are those put forward by Mr. McCreevy when he introduced individualisation.

Individualisation was progressed to some extent in later years but never completed. The result is we now have a hybrid system, with the standard rate band partially transferable between spouses, €9,000 being the gap between the single and married one earner bands. To complete a reverse individualisation would cost approximately €800 million. The Commission on Taxation recommended no change be made to the current system. It concluded the current system represents a balance between acknowledging the choices families make in caring for children and taking account of the need to encourage labour market participation. On the home carer's tax credit, the commission stated it was integral to the current hybrid system of individualisation and that "it would not be realistic to contemplate its withdrawal while the current arrangements in relation to the tax bands continue to exist or in circumstances where band individualisation is completed".

The Deputy may be aware that on budget day the Department published a number of policy documents, including the report on tax expenditure which included new guidelines for best practice in ex ante and ex post evaluation of tax expenditure. The report describes the purpose and main features of tax expenditure in an Irish context. In particular, it outlines the limited circumstances where tax expenditure should be used as an alternative to direct Exchequer funding. The report also discussed tax expenditure evaluations carried out in Ireland in recent years. The guidelines are informed by international best practice in this area and work carried out in other countries. It is available on the budget website, and the guidelines have been circulated to the Secretaries General of all relevant Departments.

I am not minded at this time to embark on a full cost-benefit analysis of the home carer's tax credit, given the recent reviews carried out by the Commission on Taxation. However, the Deputy may be interested to know the Revenue Commissioners estimate that in 2012, the latest year for which figures are available, the home carer's tax credit cost €63.2 million and was availed of by 84,400 families. The credit is currently worth €810 per annum for qualifying families.

Deputy Michael McGrath

I thank the Minister for his reply. In order not to be misinterpreted, I certainly do not advocate that the home carer's tax credit be reviewed with a view to abolishing it. I am using this tax credit to highlight an issue which has arisen in the context of the budget, which is the situation facing one income couples earning approximately €40,000. They will gain from the budget to the tune of €174, which will just offset the new water charges, whereas a Deputy in the House will gain approximately €750 per annum, which is 4.3 times the cash gain of somebody earning €40,000.

In many instances, these couples earning €40,000 are really struggling because they do not qualify for anything as they are above all of the income thresholds. Given the Minister made the decision to embark on a tax-cutting package, in my view he could have designed it more fairly so the step effect between people who fall just below the entry point of the marginal rate and those above the marginal rate need not have been as great as it was constructed by the package. This is the issue I am highlighting. The Minister has acknowledged these issues will emerge when one seeks to change the entry point to the higher rate of tax and cut the marginal rate of tax itself. The net effect is people in this situation are no better off as a result of the budget. They are among the very people who are struggling the most and who need the most help from the State at this time. In contrast, people who need less support at this time are benefitting four times more. I am highlighting this issue to place it in the Minister's mind so that if he does go down this road again next year - he has indicated he will do so, with additional changes to the universal social charge and the entry point to the marginal rate and cuts to the marginal rate itself - he will take into account the people in this category who, in my view, were largely left behind this time.

Deputy Michael Noonan

I accept the Deputy's bona fides on this, but the home carer's allowance is only one part of the measures introduced to repair the damage done to one earner families when individualisation was introduced in 1999. The reason married one earners do not benefit as much from the income tax cuts as single individuals or two earner couples is because they already pay much less income tax. It is not because of the home carer's allowance; it is because of the transferable standard rate band. A married, one earner couple on €55,000, with children, will pay 54% less income tax than a single individual in 2014 and next year it will be 55% less. They also benefit from the reduction in the higher rate band. The benefits apply to the one earner family, married or partners, with children. It is the standard rate band, and the fact this can be combined, that gives the benefit. The Deputy's point is fair enough - there are many issues to be examined between now and next year and we can include it in the mix.

Amendment put and declared lost.

Acting Chairman (Deputy Bernard J. Durkan)

Amendment No. 4 has been ruled out of order because it involves a potential charge on the people.

Amendment No. 4 not moved.

Deputy Michael Noonan

I move amendment No. 5:

In page 16, between lines 38 and 39, to insert the following:

"Amendment of section 467 of Principal Act (employed person taking care of incapacitated individual)

12. Section 467 of the Principal Act is amended in subsections (2) and (3) by substituting "€75,000" for "€50,000" in each place.".

Section 467 of the Taxes Consolidation Act 1997 provides for tax relief at the marginal rate for expenses incurred by an individual who employs a carer to take care of an incapacitated individual in his or her own home. This amendment increases the maximum amount of expenditure that qualifies for relief from €50,000 to €75,000 per annum. I decided to make this amendment on foot of a request I received from the Minister for Health, as the scheme greatly assists with people's preferred option to be able to remain in their own home. As a result, this frees up nursing home beds, which will help reduce waiting lists for such beds and relieve pressures on hospitals. Among the approximately 800 delayed discharges from hospitals are persons who could be cared for in their own homes. The most up-to-date available statistics show that in 2012 the scheme cost approximately €7.4 million in respect of 1,780 claimants. It is estimated the increase in the maximum amount allowable for tax relief to €75,000 per annum will cost approximately €350,000 in a full year. This additional cost can be justified given the importance of the scheme in allowing incapacitated individuals to be cared for in a home environment and the potential freeing up of acute hospital beds and nursing home places.

Deputy Pearse Doherty

I did not hear the number of claimants for the scheme so far. Will the Minister repeat it?

Deputy Michael Noonan

1,780.

Deputy Pearse Doherty

How many of the 1,780 claimants who claimed last year were at the €50,000 level? I am trying to gauge the demand for applying a 50% increase.

Deputy Michael Noonan

I do not have that information, but the advice from the Department of Health is that an increase will enable claims to be made for legitimate expenses incurred for keeping incapacitated people at home and that it will increase the number cared for at home or at least maintain the same number being cared for at home and take pressure from acute hospitals and nursing homes.

Deputy Pearse Doherty

I do not oppose this, but I am curious as to how the figures arose. The maximum amount of expenditure that qualifies for relief has been increased by 50% from €50,000 to €75,000. Why did the Minister settle on €75,000? If he does not have the percentage of people who were claiming up to the €50,000 limit, does he have any information on the average claims?

Deputy Michael Noonan

I do not have the average claim.

Amendment agreed to.

Deputy Michael McGrath

I move amendment No. 6:

In page 16, between lines 38 and 39, to insert the following:

“Amendment of section 462B of Principal Act (personal allowances and reliefs)

12. Section 462B of the Principal Act is amended by inserting the following new subsection (2A) after subsection (2)—

“(2A) Where the primary carer has insufficient income to avail in full of the single person childcare credit the other parent may avail of the full or unused amount of the credit, on condition that the other parent has met any court ordered maintenance payments.”.”.

One of the most controversial elements of budget 2014 was the abolition of the one-parent family tax credit and its replacement with a new single person child care credit which could only be claimed by one of the parents. That resulted in a loss of income for some single parents of up to €2,500 - €1,650 in respect of the actual tax credit and a further €800 or so in respect of the loss of the additional band at the low rate of which they had been availing. That was up to €2,500 net income - most people would have to earn up to €5,000 gross to earn that amount.

An issue has arisen since then. One parent is not allowed to transfer any unused or unclaimed credit to the other parent in the event that the primary carer does not have a sufficient tax liability to absorb the tax credit in full. If that person wishes and is willing to transfer the remainder of that tax credit to the secondary carer, he or she is unable to do so. If the primary carer is not in a position to use any of the tax credit, he or she can sign a Revenue form and transfer the entitlement to the €1,650 credit to the secondary carer in full, but that requires that person's consent and there are a number of conditions that need to be fulfilled in order for that to happen.

I am proposing that if the primary carer has a tax liability but not a sufficient tax liability to use the tax credit in full, he or she should be permitted with his or her consent to transfer the unused credit to the secondary carer so that this person could reduce his or her tax bill accordingly.

Deputy Stephen S. Donnelly

I tabled a similar amendment last year. When we discussed this on Committee Stage, the Minister explained the concern he was addressing, which seemed quite a reasonable concern, that for one child numerous people could claim to be a carer and potentially claim quite a lot for the one child because so many people were involved. When we discussed this last year, the Minister said he was inclined to take a look at it. As it stands, if the single amount cannot be transferred, it is clearly less useful to people on lower incomes than those on higher incomes who can use it. It seems, therefore, like a very sensible amendment. It was a sensible amendment last year and I support Deputy Michael McGrath in proposing it this year.

Deputy Pearse Doherty

I add my support to the amendment. I cannot imagine that the cost to the State would be substantial. Does the Minister have figures for the number of secondary carers who could avail of this provision if the amendment were enacted and the costs associated with it? What Deputy Donnelly said about the Minister's response last year makes sense. Obviously this is in a controlled space. There is already provision to assign the credit to the other carer so there are measures to ensure it is paid out to those who are caring. A person who fulfils those conditions should be able to avail of the unused credit. I commend the amendment.

Deputy Michael Noonan

As the Deputy will be aware, the single person child care credit is, in the first instance, only available to the primary carer of the child. In circumstances where the primary carer cannot utilise the credit - for example, because of insufficient taxable income - the primary carer may relinquish the credit and a secondary claimant may claim it. However, the requirement for a primary claimant to relinquish the credit before a claim from a secondary claimant can be considered is necessary, as in the first instance, only one credit is available in respect of a qualifying child or children.

There are many reasons that a primary carer may not wish to relinquish the credit. Only that person can gauge whether his or her income would be of a sufficient amount over the course of a tax year to be able to utilise the credit. An individual may wish to retain the credit in the expectation that he or she may find employment during the year, for example. In addition, taxpayers are entitled to review their tax affairs over a four-year look back period and, depending on circumstances, an individual might wish to retain the credit in order to offset any tax liability that might arise as a result of a review of his or her income tax liabilities in any of the years concerned.

I have considered the possible automatic transfer of the credit in cases where a primary carer refuses to relinquish it. However, there are many reasons that this would not be feasible, including logistical, data protection and constitutional concerns.

As regards tax relief for maintenance payments and other costs incurred by separated parents, the position is that maintenance payments in respect of children are not taxable in the hands of the children or the receiving spouse. The effect of this is that the payments are treated in the same way as if the taxpayer was providing for the child out of his or her after tax income. This is in line with the tax treatment of all other parents, where the cost of maintaining their children is not tax deductible.

The Revenue Commissioners inform me that, as of October 2014, there were 86,368 primary claimants and 2,903 secondary claimants of the single person child care credit which suggests to me that the tax credit in its current form is working as intended and I have no plans to change it at this time.

Deputy Michael McGrath

My amendment respects the principle of one credit in respect of a child. We are not talking about a second credit, but the potential sharing of the one credit between both parents. We are taking about the secondary carer making a real and meaningful contribution to the upbringing of the child. Many of these people took a savage hit in last year's budget. They lost €2,500 in many cases. I am suggesting that with the consent of the primary carer who is not in a position to avail in full of the tax credit but does avail of it in part, the remaining balance of the credit would be transferred to the secondary claimant. That is the essence of the proposal.

It is a modest change that respects the principle that the Minister introduced last year of one credit in respect of the child. It deals with the issue of multiple credits being claimed by a number of persons in respect of the care of one child. The reality is that many parents, who are heavily involved in the upbringing of their children, who are paying substantial payments and who are spending as much time as they possibly can with their children, are in difficult circumstances where a relationship has broken down. This is a very modest change to what was introduced last year. It would be practical to do so. I ask the Minister to reconsider the proposal.

Acting Chairman (Deputy Brian Walsh)

Deputy Donnelly will have to be brief as very little time remains on the clock.

Deputy Stephen S. Donnelly

I will be very brief. The reasons the Minister gave are technical in nature, as Deputy Michael McGrath said. It seems that a waiver on the unused portion at the end of the given tax year would do away with that. While the Minister has outlined the technical reasons, is he opposed to the principle, which is the sharing, the capping at still one credit's worth, and if he is not, is it something we could explore where a technical solution can be found?

Acting Chairman (Deputy Brian Walsh)

The Deputy will have to await his response until tomorrow.

Deputy Stephen S. Donnelly

I await it with bated breath.

Debate adjourned.