FF: Tax credit of
Emphasis on childcare likely to win over voters
FIANNA Fáil will provide working parents with a substantial tax credit of €2,000 per child against the cost of childcare if elected to office, party leader Micheál Martin has revealed in an exclusive interview with the Irish Daily Mail.
Mr Martin said the party’s manifesto, which is yet to be published, will announce a range of childcare proposals. However, a tax credit is likely to prove incredibly popular with the electorate, and the other parties will now be under pressure to match the promise.
‘Cost of childcare is very significant’
Fine Gael tried to introduce the measure in Budget 2016 but found the cost – at between €300million and €600million – prohibitive.
The tax break will apply only to parents who pay childminders and will not go towards the costs of creches.
Fianna Fáil will also extend the ECCE – Early Childhood Care and Education Programme – and seek to regulate the 20,000 au pairs in the country to alleviate the childcare crisis.
‘The cost of childcare is very significant, we’re nearly twice the OECD average – it’s a mortgage in itself. So we’re looking at a range of proposals,’ said Mr Martin as part of a wide-ranging interview.
‘One which will be in our manifesto will be €2,000 per child up to the first two years.’ This would mean that working parents will get a major tax break on the cost of childcare, which can cost some households more than €1,000 per month per child.
Fine Gael looked closely at introducing the measure in Budget 2017, but then Minister for Finance Michael Noonan said it was too costly. After introducing that Budget back in the autumn of 2016 Mr Noonan said: ‘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 €290million and €590million per annum.’
The full details of the costing of Fianna Fáil’s proposals will be revealed in its manifesto in the coming days, but the other parties are sure to scrutinise the plan’s cost. And the Fianna Fáil manifesto will contain further promises to cut the cost of childcare according to Mr Martin.
‘After that [one and two year olds in childcare] then you have the pre school, ECCE scheme coming in which will help then with the children of three and four years of age – we will extend that and will expand it.
‘We had started that scheme with Barry Andrews some years back just before we left office, and we also will be doing other supports for parents, for women in particular in terms of maternity leave and so on.’
There have been indications from Fianna Fáil frontbench personnel at press conferences in recent days that there will be some form of income tax measure in their manifesto, but they would not reveal the details.
Mr Martin says that the party will introduce this significant tax break as part of their manifesto because
‘We have to look at insurance’
of the regularity in which the issue is raised on doorsteps.
‘[In terms of] the cost of living... childcare is a huge cost, housing/ rents are another huge cost and insurance.
‘We have to look at insurance because that hasn’t been resolved – that crisis in childcare in terms of insurance cover.’
Creches have witnessed a huge increase in the cost of their insurance premiums.
Back in Budget 2017 the Fine Gaelled coalition announced a new childcare scheme providing means-tested subsidies towards the cost of childcare for children aged six months to 15 years.
Universal subsidies of up to €80 a month or €900 a year for all children aged between six months and three years were also announced.
Referring to findings from the interdepartmental working group on future investment in child care in Ireland, Michael Noonan said a tax credit was not recommended.
He said there were concerns a tax credit would not be equitable and would have ‘high possible deadweight’.
There were also concerns that it would 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 return to the labour market.
However, it would appear that cost was one of the over-riding factors for the government to move towards the subsidy scheme.
Tentative costings, based on estimates of average child care costs per pre-primary and primary school child care place, were applied to Department of Social Protection figures on the numbers of such children in receipt of child benefit.