Richard Bruton, the Finance spokesman for Fine Gael, and Joan Burton, Labour’s Finance spokeswoman, poured scorn on the proposal to scrap the credit, which is worth E770 a year to stay-at-home spouses.
Ms Burton said that under the current tax regime, “dramatic transfers” were taking place from families with children to dual income families, many of whom were without dependents. The OECD proposal would simply exacerbate this situation, Ms Burton said. “My attitude to the OECD is ‘the cheek of them,’ ” Ms Burton continued. “This is the most anti-family set of recommendations I have heard in a very long time. It will not be a runner here.”
The Home Carers’ tax credit was originally granted to defuse a huge political row after the introduction of a policy of individualisation by former Finance Minister Charlie McCreevy, designed to make it more it economically worthwhile for both husbands and wives to go to work.
The credit was introduced partly to compensate stay-at-home spouses. Individualisation was condemned at the time for discrimnating against stay-at-home spouses. The credit has stayed frozen over the last seven years. The result is that a gap of more E6000 pa can exist between a one income family and a double income family on the same income.
Fine Gael finance spokesman Richard Bruton also poured scorn on the OECD idea, branding it “ludicrous”. He said last night: “I would have no time at all for this thesis. One of our biggest problems in this country is creating a framework for childcare, and it seems the OECD is totally unaware of the structural difficulties we have in comparison to other countries.
“This would seem to be a prescription for economic growth at all costs, but that is not the only consideration for society. We would have different goals.” A Fianna Fail spokeswoman said simply last night: “We note the OECD observations, and our policy stands as it is.”
The “Going for Growth” report seeks to reduce unemployment in OECD countries by increasing the incentives for work. In Ireland’s case, it says average and marginal tax rates for second earners should continue to be reduced, which would imply moves towards full tax individualisation.
The OECD also wants child support to be more generous to those in work, as a further encouragement to people, especially lone parents, to take up employment. The female workforce here is still below the EU average.
“Child support was increased substantially, but in an unconditional way, and therefore does not improve work incentives,” the report says. It also wants the early childcare supplement of €1,000 for every child under six to apply only to parents who are both in work, or at least using childcare facilities.
