The Government’s controversial tax individualisation scheme has been branded unfair by the main Opposition parties.

Labour and Fine Gael have both pointed to a growing income gap between homes with a stay-at-home spouse and those where both spouses are working.

While the measure, which was designed to encourage stay-at-home mothers into the workforce, was controversial when it was introduced in 1999, it later disappeared of the political radar. Now, however, it is set to become an election issue.

The difference in take-home pay has widened after changes made by the Minister for Finance in the 2007 Budget.

A single-income family could now pay up to €5,250 more in tax than their double-income counterpart, according to the Labour party.

In 2006, the gap between double income and single income families was €5060. However Opposition parties are believed to have noticed increasing resentment among voters in sole-breadwinner homes.

Exacerbating the situation is the fact that many single-income wage earners do not know that they are entitled to an annual €770 tax credit in respect of their stay-at-home spouse.

Even where they are claiming the credit, however, dual-income couples’ still have a huge double advantage in terms of two standard PAYE tax credits, worth €1,760 each.

“Budget 2007 has exacerbated the discrimination in tax between the two family types by continuing the policies initially introduced by Charlie McCreevey through individualisation,” said Labour finance spokeswoman Joan Burton on Sunday.

“The cost of this policy to these families is now close to €700m a year, based on the Revenue Commissioners pre-budget analysis.”

While the purpose of the policy was to incentivise both parents to go out to work, regardless of circumstances, it was important to note that there are as many one-income households in Ireland as two-income ones, she said.

“There are approximately 75,000 one-income households earning between 150pc and 250pc of average earnings,” Ms Burton said.

“These are families who have committed to caring for their children themselves or to looking after aged relatives. And the policy of individualisation is now costing them very dear.”

Most one-income families are made up of employees, not owners of businesses.

“They are people who cannot afford creche and travel fees,” Ms Burton said. “They are people who have a sick or disabled child who needs special care, which has been denied them.

“They are people who have an elderly parent or relative who requires additional care. They are the people who choose to care for family members at home rather than using nursing homes.”

Fine Gael also accept that there is a yawning gap in the tax treatments – to the detriment of stay-at-home parents. However, they were not as yet prepared to make any proposals which would specifically benefit single income families. It is thought that they are still weighing the political benefits of appealing to such voters against the potential for alienating double income families.

Ms Burton said there was no doubt now that there was active discrimination in tax treatment.

“This discrimination was introduced to make work a more palatable choice. But this choice is not possible without the provision of many services at a community level – which the Government never had any intention of providing.”

She claimed individualisation also ignored the reality that peoples’ lives change more than once during their lifetimes “and that many of us will need or want to take time out at various stages.” Read the entire talk here. (Scroll down to the individualisation section)