Stay-at-home mothers have been heavily penalised by the Government’s ongoing tax individualisation policy, according to a new report published by the Iona Institute. The report says that the growing income gap, which now stands at up to €6,240 between single and double income married families should be an issue in the forthcoming election.
Launched to day by Labour Finance Spokesperson Joan Burton TD, it showed that single-income couples with children and two-income couples on the same income will pay €6,240 more in tax each year than two-income married couples on the same income as a result of successive Budgets, including Budget 2007.
The report, written by barrister John P Byrne, illustrates that the gap has now more than doubled since tax individualisation was announced by the then Finance Minister, Charlie McCreevy, to great controversy at the end of 1999.
Launching the document Deputy Burton said that the Government must stop widening the gap between one-income and two-income married couples and should increase the current Home Carers Credit from €770 pa to €1760 pa. The policy would cost €100 million and would benefit the 307,000 one-income married couples in the country.
A recent opinion poll conducted on behalf of The Iona Institute by Lansdowne Market Research found that 80pc of the public wants taxation reduced for families with children.
The pressure of commuting and creche costs, Deputy Burton said, meant that many women wanted to take time out of the work force to raise their children when they were small. But the current policy did not allow them to take this option, she continued.
She added: “The policy of individualisation has led to dramatic transfers from families with children to two income households, many without dependents, the so-called ‘dinkys’ (double-income, no kids). The consequence of individualisation is to introduce a significant and growing bias against families with children where one spouse chooses to stay at home and care for children.”
The report condemns individualisation as a form of ‘social engineering’ aimed at forcing as many women as possible into the workforce regardless of their own individual preference. It says the State should not favour paid employment over work in the home or vice versa.
It says: “One-income married couples and two-income married couples should be treated on the same basis for tax purposes. This should be done in the most equitable way possible and in that sense should not impact negatively on two-income married couples. If equalisation of the effect of the tax bands cannot be achieved in one budget, then it should be accomplished over a number of budgets.”
It continues by pointing out that the Home Carer Credit, worth €770 pa, introduced as a result of the controversy caused by tax individualisation in 1999, has not been increased since Budget 2000. The Credit applies to all married one-income couples and is aimed at the spouse who works in the home caring for a child or other dependent.
