THE IMF HAS controversially suggested a 5 per cent tax cut for women – a move which it believes could increase GDP by 1.75 per cent when combined with better childcare.

In a memo published on its website, the IMF suggests that imposing a tax cut for women would attract second earners to join the work force.

The paper states:

The implicit tax on the gross income of a second earner tops 70 percent when including social security contribution, benefits loss, and the cost of child care in Austria, France, Ireland, and the Slovak Republic.

Measures especially geared toward second earners, combining tax incentives—including allowing women to file their labor income separately from their husband in countries with joint family taxation—and better child-care support, could be specifically targeted at raising female participation.

It concludes that if such measures taken would ultimately raise GDP:

IMF staff estimates show that cutting labor income taxes paid by women by 5 percentage points would increase the GDP level by 1¾ percentage points, for a fiscal cost of ½ percentage point of GDP.

The memo also proposes a gradual reduction in dole payments and a drop in the minimum wage – as well as advocating that more resources be given to Fás.

Poll: Do you support the IMF proposal for a 5 per cent tax cut for women?