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Column: Removal of One Parent Family Credit is to the detriment of children

The effects of the removal of the tax credit for lone parents is now being seen, significantly reducing overall income for parents who are living apart, writes Margot Doherty.

Margot Doherty

OUT OF THE blue, on Budget Day in October 2013, the Minister for Finance, Michael Noonan, TD., announced that he was removing the One Parent Family Credit (OPFC) and replacing it with the Single Person Child Carer Credit (SPCCC) on foot of a recommendation contained in the Commission on Taxation Report in 2009.

The OPFC was a tax credit of €1,650 per annum that was available to those who were parenting on their own. It brought with it an increase in the Standard Rate Tax Band from €32,800 to €36,800. According to the Revenue, the tax credit resulted in reducing a claimant’s tax liability by €31.73 a week and – where a claimant’s income exceeded €36,800 – the additional rate of the Standard Rate Tax Band was worth a maximum of €16.15 per week. The maximum value of the credit and the additional rate band therefore was €2,490 a year or €47.88 a week. So a significant amount to lose. The following table illustrates the changes:

Annual wage difference in amount of tax paid per week

€13,500 (minimum wage x 30 hours) No change
€20,000 + €13
€30,000 + €10
€40,000 + €48
€60,000 + €47

As stated above the OPFC was available to parents parenting on their own. This meant that where two estranged parents were sharing the parenting of the child, both parents could claim the credit. The requirement from Revenue was that that the child resided with the parent at least one night in the year. Obviously, this criterion was totally inappropriate and the OPFC was in need of reform.

However, rather than reform this essential tax credit Minister Noonan decided, arbitrarily, to completely remove it.

To add insult to injury, the Minister has named the person who receives the new tax credit the Primary Carer (usually the mother) and the other parent the Secondary Carer (usually the father). This terminology has produced several witty but sad images on the Facebook page set up by fathers angered by the change – Irish Fathers for Equality.

We believe it is best for children to grow up with the involvement of both parents in their lives, provided it is safe and practical. Shared parenting is good for children and research shows this clearly.  The State should be supporting this, rather than removing an incentive to shared parenting.

Running two homes

The removal of a tax credit, and its associated tax bands, for non-resident parents will result in a significantly reduced overall income for parents who are living apart. Where parents do not live together there are two households to be maintained, which incurs considerable expense.  With so many single parent families already struggling financially, further reductions in the income of the mother, or the father, are likely to negatively impact on children.  This could result in some non-resident parents having no option but to reduce the amount of maintenance paid to the other parent for the child.

How many will be affected?

Revenue have estimated that there were 76,800 income earners on income tax records who were in in a position to utilise some or all of the One-Parent Family Tax Credit in 2013.

The gender breakdown was estimated as follows:

Female: 51,224
Male: 25,573
Total: 76,797.

It is estimated the impact of the change will affect 15,000 parents.

Amendment

Treoir worked hard during the Dáil debates on the Finance Bill No. 2 of 2013 to have the proposal reversed but to no avail. In response to pressure from Treoir, One Family and others the Minister introduced an amendment which would allow the “Primary” carer to relinquish the SPCCC to the “Secondary” carer. However, the Minister in his wisdom decided that the “Secondary” carer would be required to have the child in his care for 100 days during the year.

While this concession of relinquishing the SPCCC is welcome we believe the criterion of a child spending a minimum 100 days with the non-resident parent in order to be eligible for the tax credit is excessive, especially for unmarried fathers. Fulfilling the 100 day rule could prove impossible in the several situations, for example where the child is very young. It is unreasonable and shocking to expect the mother of a very young baby to share parenting to this extent with the other parent, especially where the mother is breastfeeding. It is an unwarranted interference into family life.

Regarding the SPCC, the Revenue suggests:

“If a child resided with the secondary claimant throughout the year for twenty weekends from Saturday morning until Sunday evening, together with 6 weeks of the 8 Summer holiday, one week at Christmas and two weeks at Easter, (Saturday to Saturday on each occasion), the criteria would be satisfied.”

This is a completely unrealistic scenario.

We must reverse the recent changes

Our foremost recommendation is to reverse the recent changes and reform the eligibility criteria; we do not agree with the requirement to have a child for 100 days in the year where the SPCCC is being transferred to the “Secondary” carer.

Treoir has been inundated with calls from fathers who are this month seeing the effect of the removal of the One Parent Family Tax Credit. Many have already taken cuts in their salaries and this new financial blow is causing great financial distress and can also result in causing disagreement in some relationships. Unfortunately it is ultimately the children who will suffer as a consequence of this most unjust measure.

Margot Doherty is a founding member of Treoir and has been working with them for the last 30 years. Over that time she has worked as an information officer, writing many publications and is now the policy officer as well as being Assistant Chief Executive.

Treoir operates the National Specialist Information Service for unmarried parents, single or cohabiting, their extended families and those who work with them. Unmarried parents and their extended families can contact Treoir for specialist information on the legal rights and responsibilities of unmarried parents, living together or not. To speak in confidence to a information officer call 1890 252 084 or you can email info@treoir.ie. Visit the website and keep up to date with information by following Treoir on Facebook and Twitter.

Read: Charities say Social Welfare Bill will push one-parent families into poverty

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Margot Doherty

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