Tax credit for childcare

space2ground1

I've had reason recently to wonder why there's no tax credit available for childcare costs. I wonder if anyone will be able to tell me why I've got this wrong as I think its a no brainer for any government.

If a 2 income family loses an income, its very possible that the second parent will look after the children for a period until another job comes along. However in this economy, its also likely that the second parent will have to take a substantial paycut to get back into the workforce (unless you're in Dublin but thats a whole different story/economy!).

Now say if I take figures from the sky and that parent was getting €150 a week in unemployment assistance and gets a job for €300 a week net. They then have to pay a childminder to take care of the children while they're at work. Thats the €150 gone so the person is no better off, and after the unemployment assistance ends, they're working a fulltime job for €150 net, with someone else taking care of the children. They may decide thats not enough to be worth being away from caring for the children.

If there was a tax rebate system (credit/allowance..) for childcare, it would mean a good chunk of the €150 childcare a week would come back. The person would then have extra money to spend in the economy and wouldn't need job seekers or unemployment ben/assistance.

Surely getting people back to work, even part time for lower wages is better than having people not being able to afford to go back to work to contribute financially to the economy because of the childcare costs?

comongethappy

Good idea.

Though I'd like to go further with replacing the entire children welfare cash system with a grander child support tax credit to replace cash.

Permabear

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space2ground1

If this is such a no brainer, and a potentially really positive thing for society, (anyone remember society? We used to have one before we got an economy).. Why hasn't it been done?

Permabear

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space2ground1

It just seems odd to me that the situation prevails that the govt doesn't set it up to be the easiest option for the 2nd adult to get a job. The total PAYE take would surely be more than the total allowance given.

CrookedJack

space2ground1 wrote: »

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It seems odd to me that you haven't noticed that there are hundreds of thousands more people than there are available jobs, so giving tax cuts to allow more people to compete for non-existent positions does not seem sensible.

In a situation where there is a labour shortage this kind of credit is appropriate, and has been implemented in the past if i remember correctly. It is not appropriate now.

Also..

Permabear wrote:

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The need to inject a feminist gripe everywhere is tiring and unhelpful. The fact is that during this recession many more men than women became unemployed, and there are much more stay-at-home fathers now than ever before. Which is hardly indicative of a government plan to keep women at home.

Permabear

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CrookedJack

Permabear wrote: »

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Again I don't think the feminist rant is in anyway helpful, especially considering you manage to say that the government are both forcing women into and forcing them out of the workplace. I don't think childcare is a feminist issue, and I don't think there not being a tax credit is in any way due to a government anti-female worker agenda.

In fact I would say that introducing a tax break to allow stay at home parents to become jobseekers when there are no jobs, and then having to impose even for drastic cuts in coming budget to finance the increased debt would be much less fair to everyone involved.

bakerbhoy

There used to be tax credits/allowances for children .It allowed one income families afford to live and take care of their own children. Firstly the child tax allowance was removed.
Then McCreevy did away with the married allowance (It was gender neutral) and replaced it with tax individualisation to force mainly mothers out into the workforce.
There would be lower unemployment figures and lower nett cost to the tax payer if tax individualisation was done away with.

Permabear

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CrookedJack

Permabear wrote: »

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Again you're trying to turn this into feminist debate, I've no inclination to argue gender roles in Irish society. I'm simply pointing out the lack of a childcare tax credit has nothing to do with a government agenda to keep women in the home, which is the implication of your first statement. It has everything to do with huge budget deficits, huge employment shortages and tax increases. You've yet to back up your initial statement in any sensible way.

Permabear

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CrookedJack

Permabear wrote: »

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So just to clarify then, the lack of a childcare credit is not due to the government believing a woman place is in the home and not in the workplace? That it is due to economic reasons not an anti-woman agenda?

Permabear

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space2ground1

Permabear wrote: »

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If the credit was only available somehow to the second earner though, wouldn't their net PAYE on average be greater than the average amount of credit allowed? It could certainly be managed that way. That would be a cost neutral situation at least for the states finances.

shedweller

Wouldn't the cost of childcare go up to reflect the tax savings?

pwurple

CrookedJack wrote: »

It seems odd to me that you haven't noticed that there are hundreds of thousands more people than there are available jobs, so giving tax cuts to allow more people to compete for non-existent positions does not seem sensible.

In a situation where there is a labour shortage this kind of credit is appropriate, and has been implemented in the past if i remember correctly. It is not appropriate now.

There is most certainly a labour shortage for qualified experienced people. I've four vacancies in my own place of work that we cannot fill locally. Looking at getting visas for foreign workers instead. I personally know two women with the appropriate qualifications and experience who look after their children instead of working these jobs, primarily because of childcare costs rather than desire to switch their career to childcare. They are not brainless, they are well able to work out the financial difference.

An unqualified ex-builder cannot fill these positions. Neither can a graduate. We are talking about people with third level or higher qualifications, and often 10+ years experience.

CrookedJack

pwurple wrote: »

There is most certainly a labour shortage for qualified experienced people. I've four vacancies in my own place of work that we cannot fill locally. Looking at getting visas for foreign workers instead. I personally know two women with the appropriate qualifications and experience who look after their children instead of working these jobs, primarily because of childcare costs rather than desire to switch their career to childcare. They are not brainless, they are well able to work out the financial difference.

An unqualified ex-builder cannot fill these positions. Neither can a graduate. We are talking about people with third level or higher qualifications, and often 10+ years experience.

But that's not a labour shortage, you've said you know at least too appropriate people so presumably the labour exists in the country. In fact according to you the reason those jobs are unfilled is not because there are no workers, but because your company is offering a salary that is insufficient to cover their expenses. Simply put the company needs to pay more for that position. Presumably your company increase the amount paid your friends would be able to take the jobs, no?

I think that's a more appropriate way to fill the minority of highly qualified positions which are unfilled due to the cost of child care, rather than a blanket credit, and then more savage tax increases to pay for them.

The reason why this is a non runner is because you will bring our the stay at home mothers.. who are stay at home mothers because of conviction not because of child care costs they will give out very loudly and say it not fair why should mothers who work out side the home be advantaged financially just because of the cost of child care.

While a lot of the religious nonsense about family values is gone form Irish society there is still a strong conservative element in Irish society.

Permabear

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shedweller

Permabear wrote: »

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Which begs the question: Why?
Other countries have subsidised (and well run) childcare because it is better for the country if people are working. Why doesn't that apply here?

Permabear

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aliveandkicking

Permabear wrote: »

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All very good points. Also appreciate your stats above on female qualifications.

An other to add could possibly be higher child benefit rates than the majority of other EU Countries.

http://www.telegraph.co.uk/news/worldnews/europe/10391238/Benefits-in-Europe-country-by-country.html


Would those advocating a childcare tax credit or equivalent be willing for child benefit to be reduced?

Permabear

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comongethappy

aliveandkicking wrote: »

Would those advocating a childcare tax credit or equivalent be willing for child benefit to be reduced?

I would indeed be happy with that.

Reduce or eliminate the cash payments & replace with tax credits.

The only people who would suffer is the bookies/pubs

Geuze

Note that a child tax credit is different from a childcare tax credit.


A childcare tax credit, like in the UK, only applies if the child is in registered childcare.

Here is details of the UK scheme:

https://www.gov.uk/childcare-tax-credits/what-you-get

Geuze

In the UK the childcare tax credit is like a cash subsidy to childcare, I think.

It pays 70% max of cost of childcare.

I don't think it's a universal scheme.


"1. What you'll get
You could get extra tax credits to help pay for some of your childcare costs while you’re working.

You could get:

up to £122.50 a week - for 1 child
up to £210 a week - for 2 children or more"

aliveandkicking

comongethappy wrote: »

I would indeed be happy with that.

Reduce or eliminate the cash payments & replace with tax credits.

The only people who would suffer is the bookies/pubs

The last line above is simplistic at best, tarring everyone with the same brush and the kind of of analysis you would expect to see in a thrashy tabloid rag.

My own situation for example would see me lose out if child benefit was reduced and replaced with a childcare tax credit. I am in the very lucky position where we do not need to pay for chilcdcare as we have the assistance of grandparents. My child is not in regisitered childcare so we would not be entitled to a childcare tax credit if it were introduced so would lose out if child benefit was reduced. I can assure you that neither myself nor my partner gambles/drinks/smokes a penny of the child benefit we receive.

That's not to say I am against the principle of tax credits instead of child benefit, just that you need to consider all sorts of situations instead of simplistic nonsnese like the above quote.

Permabear

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comongethappy

aliveandkicking wrote: »

The last line above is simplistic at best, tarring everyone with the same brush and the kind of of analysis you would expect to see in a thrashy tabloid rag.

My own situation for example would see me lose out if child benefit was reduced and replaced with a childcare tax credit. I am in the very lucky position where we do not need to pay for chilcdcare as we have the assistance of grandparents. My child is not in regisitered childcare so we would not be entitled to a childcare tax credit if it were introduced so would lose out if child benefit was reduced. I can assure you that neither myself nor my partner gambles/drinks/smokes a penny of the child benefit we receive.

That's not to say I am against the principle of tax credits instead of child benefit, just that you need to consider all sorts of situations instead of simplistic nonsnese like the above quote.

Relax.

My first post above said I would prefer credits for both childcare & child support.

(Also, for what its worth, child welfare day IS the busiest day in the bookies (after Saturday)... I know because I spent 6 not so terrific months working in a PP branch some years ago)

aliveandkicking

Permabear wrote: »

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Oh I agree with all the above. I find it hugely irritating knowing what the usual suspects do with their child benefit money but I don't like when someone tars the whole of society with the same brush.

Farmer Pudsey

This is a huge can of worms. the reason that CB was so high in Ireland was we had no child/childcare tax credit. However the holier than thou that want CB taxed have opened a can of worms.

How can a government means test or tax CB (history of means testing in Ireland leaves a lot to be desired) ans still encourage both parents working. If you look at costs if a couple want to have a family between childcare and travel to work costs it is unviable in a lot of cases.

Any credit proposed would be standard rated so you would need a huge tax credit for it to be of any use or incentive to encourage a second parent to work. We have the added issue that above 33K is taxed at 52%. We really need a change in taxation to encourage family's to stay in labour force. it is not so much to encourage the stay at home spouse to continue working but to help encourage low income workers back into the workforce

The_Honeybadger

This would be a massive help for me if it were to happen. Both myself and my partner work full time but the second wage is barely at break even when you consider the cost of childcare and travel etc. We are paying well over 10k per year on childcare alone, it's a killer.

shedweller

My wife works only 1.5 days a week. To work a full week nets barely €50 a month after extra childcare etc. is taken out. Not worth it!

The_Honeybadger

shedweller wrote: »

My wife works only 1.5 days a week. To work a full week nets barely €50 a month after extra childcare etc. is taken out. Not worth it!

We just keep telling ourselves that it's not forever and once they're in school we'll be in a much better position than if she'd stayed at home as she'll have an established career and income. I also think it is very positive to have the kids mixing with other children. Financially though it's definately not worth it and it can put major pressure on at times.