Alan Farrell
Ceist:147. Deputy Alan Farrell asked the Minister for Finance his views on the provision of tax relief on childcare services for families; and if he will make a statement on the matter. [10842/19]
Amharc ar fhreagraTuesday, 5 March 2019
Ceisteanna (147)
Freagraí scríofa
The Minister for Children and Youth Affairs has primary responsibility for Government policy in relation to childcare. As the Deputy may be aware, parents are exempted from any income tax liability in respect of direct payments to childcare providers under the Single Affordable Childcare Scheme as operated by that Minister’s Department.
The tax code also provides certain tax reliefs and incentives in this general area including the scheme of Accelerated Capital Allowances for employers that incur capital expenditure in providing childcare facilities for use by their employees (introduced in Finance Act 2018) and the Home Carer Tax Credit.
With regard to the Home Carer Tax Credit, a review of this measure will be carried out by my Department in 2019 as part of First 5, the Whole of Government Strategy for Babies, Young Children and their Families (2019-2028) which was launched in November 2018. The purpose of this review will be to undertake research and analysis of the utilisation and effectiveness of the Home Carer Tax Credit, in line with the Tax Expenditure Guidelines.
In relation to taxation more generally, I have no plans at present in relation to the question of possible further income tax relief for parents for childcare services. In this regard, I note the findings of the Interdepartmental Working Group on Future Investment in Childcare in Ireland, which published their report in July 2015. Having considered the option of a tax credit that would be available to those who incur childcare costs, the Group recommended against introducing such a measure. The group had concerns that a tax credit would not be equitable, would have high possible deadweight, could end up being fully absorbed in the cost of childcare, and might not have a meaningful impact on a parent's decision on whether to join or to return to the labour market.
The Interdepartmental Working Group also made some initial estimates of the potential costs of such a tax credit based on available data. Tentative costings, based on estimates of average childcare costs per pre-primary and primary school childcare place, were applied to Department of Employment Affairs and Social Protection figures on the numbers of such children in receipt of Child Benefit. If a tax credit were provided in respect of even half of these children at the standard rate of 20%, it would involve a potential cost to the Exchequer of between €290 million and €590 million per annum. The variation depends on the rate of take-up which is difficult to estimate. It was assumed for the purposes of that costing that all paid childcare would be covered by the relief (i.e. not just centre-based care).