Low income families in tax initiative
RADICAL TAXATION SOLUTION MOOTED FOR LOW INCOME FAMILIES BY TD
Fianna Fáil TD Marc MacSharry is proposing a new taxation system designed to ensure working families are always better off working than being on welfare.
He is proposing a radical new child tax credit that would be worth around €5,000 very year to low income families.
“Over the last 6 months or so I’ve researched and written a paper on “Fairer Taxation For Working Families with Children.
“It considers the issue of work versus welfare and suggests that the taxation system recognize the cost of raising a child in a similar way to the welfare system.
“It identifies some of the welfare trap issues where lower wage working families are actually better off on welfare than working.
“My proposal is the introduction of a tax credit/allowance per child of working families up to a maximum of four children.
“For the purposes of preparing a paper I pitched the allowance/credit at the same level as the social welfare child allowance payment however to do so in reality at that level would be reckless with an an- nual cost of over €1bn.
“What I am trying to do is start a discussion and a debate which may lead to an acceptance of the principle of a child tax allowance/credit and perhaps see the State make a start and introduce one at a modest level which subject to sustainability and resources could be increased over 2-4 administrations (10-20years).
“A start might be a government committing perhaps €100m per annum to such a measure. The benefits would be significant to low income families while also ensuring that working families are always better off working than being on welfare.
“There would be natural caution and concerns in terms of eroding the tax base and so on however having considered all I believe it is the right way to go.
“From the introduction of taxation in Ireland in 1799 right up to 1986 with the abolition of the child tax allowance working families with children were always taxed less than those without children.
“My proposal is progressive and so lower incomes would benefit substantially more than those on higher income levels.
“This is a personal proposal and discussion document and so it is not Fianna Fáil policy.
“Rather I wish to promote it in a general way in the hope that I can start the discussion and perhaps convince all political and state stake holders to support the principle and move towards the introduction of a child tax allowance/credit,” he said.
He added that he set about compiling this analysis based on the experience of dealing with many families depending on social welfare and many more who are depending on low income employment.
“Through the years it has become clear that many issues exist which must be addressed in order to eliminate discriminatory quirks in both our Welfare and Taxation Systems while incentivising work and providing the necessary supports to families whether working or not,” he said.
Deputy MacSharry said his proposal is that we treat children in exactly the same way within the Tax and the Welfare Systems.
“This can be done by introducing a Tax Credit/Allowance for each child of persons in employment. The Tax Credit/ Allowance should be equivalent to the Child Allowance payment within the Job Seekers Allowance, One Parent Family Payment and the other 25 Welfare Schemes. The 2018 Child Allowance within JSA and the One Parent Family Payment is €1,654 per child per annum and this should be matched by a Tax Credit/Allowance per child of €1,654,” he stressed.
The impact of the change to our Tax System will be highly progressive he believes. A low income family in this situation such as worker on minimum wage earning around €20k Gross Income per annum will get an additional 25% Net Income whereas a similar family with a Gross Income of €70k will only get an increase of 10% in Net Income.
The Deputy’s proposal is at a discussion paper stage and has not been endorsed by his party .