Dáil Éireann Debate, Wednesday - 10 November 2004
103 Mr. Gormley asked the Minister for Social and Family Affairs if contact has been made with the Department of Finance on the income redistribution benefit of refundable tax credits; and if he would be prepared to lobby for such a measure as an assist to other social welfare measures. [28172/04]
Amharc ar fhreagraThe social welfare system plays a key role in the final distribution of disposable incomes and in particular on the ability of many low income individuals and families to participate in society. Previous analysis of the social welfare system shows that it is highly effective in the role of strengthening the income position of those at the bottom of the income distribution.
Some commentators argue that the redistribution objectives of both the tax and the social welfare systems could be enhanced through closer co-ordination between the two systems, particularly in the form of refundable tax credits. Refundable tax credits allow families with incomes below the tax threshold receive a cash benefit or refund of any unused portion of a tax credit. Policy on income taxes is primarily a matter for the Minister for Finance and I understand he has indicated that he has no plans to introduce refundable tax credits at the present time. I also understand that initial estimates of the cost of making all unused personal tax credits refundable would be in the region of €1.6 billion annually.
In the circumstances, my priority objective is to secure sufficient resources to meet the objectives contained in the programme for Government relating to social welfare and to enhance the effectiveness and efficiency of the social welfare system in addressing issues of poverty and social inclusion. The introduction of a refundable tax credit and its potential role in the tax and social welfare systems was examined by a working group established under the Programme for Prosperity and Fairness. The working group comprised representatives of the social partners and relevant Government Departments. I understand its report is currently being finalised and I await it with interest.
