Committee Reports::Report - The Impact of State Tax and Social Welfare schemes on the Family::07 February, 1996::Report






BURKE, Paddy



COUGHLAN, Mary [Vice- Chairperson]




FLOOD, Chris


HUGHES, Séamus


MCGRATH, Paul [Chairperson]










SMITH, Brendan


TIMMINS, Godfrey




WALSH, Eamon


0. Report Structure

This report sets out the Joint Committee’s views on aspects of the tax and social welfare scheme which it considers to be detrimental to reinforcing the family unit as the primary unit in Irish society.

First the background to the Joint Committee’s interest in the area is described, together with a brief description of the consultant’s study and the Joint Committee’s deliberations on its content. Second, the Joint Committee outlines its position on what defines a family for the purpose of the report. Third, the Joint Committee sets out its recommendations.

1. Introduction

The Joint Committee in pursuance of its Orders of Reference decided that research should be carried out on aspects of the tax and social welfare schemes that may be considered anti-family.

The Joint Committee decided that Mr. Colm Rapple should be commissioned to carry out the research with a view to presenting a full report to it in January 1996. His objective was to identify and report on elements of the taxation, social welfare and various grant schemes that may discriminate against the family unit.

The Joint Committee has considered the consultant’s report in detail. The consultant’s report is reproduced in full in Appendix A. In its deliberations, the Committee was conscious of a number of factors. Firstly, there is the contentious issue as to what constitutes a modern family. This is not a simple issue and is one which produces much public debate. Social change has produced diverse forms of what may be termed household units. Many of these units will perceive themselves as a family. What kind of social grouping should be labelled as a family? A simple dictionary provides many definitions, but where does the term family end and the term community begin? This report does not intend to provide the ultimate definition of what constitutes a family. It does, however, need a base to work from and this is described in the next chapter.

The Joint Committee, in considering, an interim report from the consultant in December 1995, decided that a copy of the report should be forwarded to various Government Departments to give them an opportunity to supply their observations.

Full replies received have been reproduced in full in Appendix B. These include replies from:

Department of Social Welfare;

Department of Health;

Department of Agriculture, Food and Forestry; and

Department of Education.

The interim report was inadvertently sent late to the Department of Equality and Law Reform and hence a full response was not available for this report.

In considering its recommendations, the Joint Committee was also conscious of the ongoing deliberations of the Expert Group on the Integration of Tax and Social Welfare established in 1993. It is understood that the Group is expected to report shortly. It should be borne in mind that the Budget of 1996 was introduced by the Minister for Finance during the Committees deliberations on the study. As the Budget did not effect the study results, the Joint Committee decided that no purpose would be served in updating all the figures involved, an exercise which would only delay its launch.

The Joint Committee wishes to thank its consultant Mr. Colm Rapple for his valuable work and input into its deliberations. The Committee acknowledges the time and effort put into this work by Mr. Rapple and appreciates his courtesy and co-operation given to it at all times.

2. Family

The consultant has discussed the family as it is recognised by the Constitution and interpreted by Court judgements, the European Parliament, the United Nations, the Department of Social Welfare and the Revenue Commissioners. Not all agree in their approach.

The Joint Committee, for the purpose of this report decided that, while recognising the different forms of family that exist, it should recognise the permanence that some form of contractual situation would give a family. That contractual arrangement currently recognised is marriage, and this report approaches its recommendations from this perspective.

The Committee’s Orders of Reference state that it should consider the impact of social change and State policies on the family, in both its extended and nuclear forms, with particular reference to the protection and enhancement of the interests of children and elderly and measures which can be taken to support them especially with regard to childcare, education, juvenile justice, and care of the elderly, and to report thereon to both Houses of the Oireachtas.

To quote the consultant:

“The concept of “family” can be variously defined. While the family is given particular recognition in the Constitution, it does not provide a definition. For that we must rely on Court judgements.

Article 41.1 reads

“1. The State recognises the Family as the natural primary and fundamental unit group of Society, and as a moral institution possessing inalienable and imprescriptible rights, antecedent and superior to all positive law.

“2. The State, therefore, guarantees to protect the Family in its constitution and authority, as the necessary basis of social order and as indispensable to the welfare of the Nation and the State.”

Article 41.2 reads:

“1. In particular, the State recognises that by her life within the home, woman gives to the State a support without which the common good cannot be achieved.

“2. The State shall, therefore, endeavour to ensure that mothers shall not be obliged by economic necessity to engage in labour to the neglect of their duties in the home.”

In 1966 the Supreme Court ruled that “the family referred to (in Article 41) is the family which is founded on the institution of marriage and in the context of the Article, marriage means valid marriage under the law for the time being in force in the State”.

In the Murray tax case Justice Costello in the High Court said that he derived his concept of marriage in a Constitutional context from the Christian notion of “a partnership based on an irrevocable personal consent given by both spouses which establishes a unique and very special life-long relationship.”

This definition excludes cohabiting couples and unmarried lone parents. But there is a view that Article 41.2 could apply to unmarried mothers. In a standard text book on the Constitution1 the following is reported:

“Writing extra-judicially2 Walsh J hinted at the possibility that Article 41.2 might not be confined exclusively to married mothers -- he observed that the word “family” does not occur in that provision -- and in L v L, McCarthy, J cautioned that he was not to be taken as holding that the section was restricted to mothers of families based on marriage.”

1The Irish Constitution, J. M. Kelly, Gerard Hogan and Gerry Whyle, Buerrworths, 1994

2The Constitution of Ireland 1937-87 (Dublin, 1988)

There is a need to support other forms of stable family units and it is important that children are not discriminated against on the basis of which type of family unit they are in.

3. Recommendations

3.1.The Joint Committee has considered the consultant’s study in detail and has agreed that the following recommendations will support the family unit within the definition described in the previous chapter.


3.2.1.The tax position of lone parents.

The term lone parent includes single and widowed parents.

It is recommended that the bereavement allowance for widowed persons should not be phased down as at present but should be retained for the duration of there being dependent children (defined as those children having cleared full time education to the level of a primary degree).

It was agreed not to endorse the consultant’s recommendation that double tax bands which applied to married couples be extended to lone parents.

It was agreed that the tax take from a couple with children and those without should be different. The Committee recommends that families with children should have either an extra tax allowance or a widened tax band to recognise the extra responsibilities involved.

This Committee recommends that Tax and Social Welfare Policy should support married couples as the optimum unit type.

3.2.2.Child Care Allowance

Recognition by the Revenue Commissioners of expenditure by a couple on employing a child carer was discussed at length.

It was agreed that this is an area worthy of a separate study.

It is understood that a UK study on child minding services exists and that an EU network on childcare is currently investigating childcare provision.

The area of child care, it is to be stressed, is about supporting the family and children, and should be investigated, addressing all the issues involved. It is felt that it has not been given enough attention up to now.

3.2.3.Income Tax Exemption Limits

It is recognised that the deliberations of the Expert Group on the Integration of Tax and Social Welfare will have a bearing on the operation of these. However, it is recommended that widows and widowers be treated as married couples for the purpose of these limits (they are currently treated as single people).

3.2.4.Other Tax Areas:

The Committee considers that

(a)the present exemption of tax concessions on the leasing of property by reason of family relationships should be lifted;

(b)the principal family residence should be excluded from the calculation of gross assets when considering the agricultural concession on inheritance tax;

(c)the Revenue Commissioners should undertake an examination of all other tax concessions from which people are excluded by reason of family relationships. Fear of potential abuse is not considered a valid reason for such exclusions. Where the principal of concessions is accepted, it is for the enforcing authority to ensure that no abuse occurs.

(d)The Revenue Commissioners should examine the income limits applying to registration for Value Added Tax for small family businesses. The Joint Committee’s view is that the thresholds should be increased for VAT purposes.

3.2.5.Tax Concessions in Year of Marriage

Consideration should be given to some form of marriage gratuity as a means of assisting in setting up a family home.

3.3.Social Welfare

3.3.1PRSI Disregard

In respect of the weekly PRSI disregard, the Committee would suggest that married couples with only one earning partner should enjoy a double PRSI disregard.

3.3.2.Family Supports for Children

-The Child Dependent Allowance rates under the Social Welfare system require review towards equalisation.

-The Joint Committee recommends the establishment of a Family Affairs Unit in the Department of Finance with a brief to coordinate policy and expenditure programmes regarding the family and to devise new approaches as required. Such a unit would include representatives of the Departments of Justice, Education, Health, Labour, Social Welfare and other relevant Departments. The unit would be more than an interdepartmental committee or a Commission of Enquiry; it would be a strategic planning unit. It would not seek a policy blueprint in relation to the family, but would seek to build on the considerable structure already in place, undertaking reconstruction, where necessary. This is as recommended in the ESRI report on “Family, Economy and Government in Ireland” by Finola Kennedy (January 1989).

The Joint Committee also agrees that it would be useful if the state programmes aimed at supporting the family were once again prepared and published in the form used in the Comprehensive Public Expenditure Programmes which were issued by the Department of Finance in the late 1980s. These provided for a clear statement of objectives and the bringing together into single programmes of all expenditure aimed at that objective.

The consultant concluded that “the State’s family income support schemes require restructuring. While some anomalies could be removed with relatively minor changes, the Government is clearly committed to a major overhaul. Budgetary constraints may require that the changes have to be made over a number of years. It is essential that all of the proposed changes be spelt out in advance and the financial commitment made to their full implementation. Part implementation of a programme for change could create more anomalies than it would cure.”

The Joint Committee is in agreement with its consultant but in doing so is conscious of the pending report from the Expert Group on the Integration of Tax and Social Welfare.

3.3.3.Family Income Supplement

An interim report submitted by the consultant in mid-December 1995, was referred to a number of Government Departments for the purpose of obtaining their views.

The Department of Social Welfare provided their views. On lone parents and cohabiting couples, the Department stated:-

“In comparing the income situation of a lone parent with a couple, the researcher may also wish to consider that low-earning lone parents can combine lone parents allowance, earnings and FIS to create a higher total income from employment that other types of workers on similarly low incomes.

The rationale behind this is to encourage lone parents to pursue a course into employment and thus away from dependency.”

The increase in income threshold contained in the recent Budget was noted.

However, the Committee recommends that Family Income Supplement be based on net income rather than gross income in order to remove the anomaly of having net losers arising as a result from increases in wages.

On the question of take up of FIS, the Department of Social Welfare’s responded to the aforementioned interim report as follows:-

“The Department continues to actively promote the Family Income Supplement scheme but there has been a move towards more targeted measures to increase take-up. These measures include, promoting the scheme as a work incentive measure via the Departments’ Job Facilitators; fact packs and leaflets disseminated through Health Boards, National Social Services Board, Society of St. Vincent De Paul, ..... etc., information circulated with Child Benefit Books, and mail shots to employers. These measures have proved to be more effective than ‘blanket’ advertising and the number of claims for FIS has risen sharply in recent years. For example the number of families in receipt of FIS rose by over 40% between the years 1992 and 1995 (from 7,735 in 1992 to 11,079 in 1995 (November). Low take up levels have also been experienced in other countries with schemes similar to FIS.”

The Committee notes the promotion efforts of the Department and the increase in claims. It also notes that the National Social Services has been brought under the Department and that an additional £600,000 had been announced in the Budget for the development of a network of citizens information centres, compensation, etc. The Department should continue to promote the scheme.

The Committee can see no justification for the exclusion of the self employed from the FIS scheme and called on the Department of Social Welfare to review it as a matter of urgency.

3.3.4.Secondary Benefits

-It is noted that the maximum public ward hospital charge that any family can accumulate in one year is £200, without a medical card or private health insurance.

-to ensure consistency and to avoid confusion amongst potential applicants, the Joint Committee recommends that details of all guidelines used in considering medical card entitlement should be made readily available.

-in relation to the consultant’s recommendation that medical card benefits be phased out as family income increases rather than a straight cut-off, the Committee noted with approval the recent Government initiative in allowing unemployed people who return to work to retain their medical card for 3 years.

3.3.5.Supplementary Welfare

In considering the area of housing and rent allowances the Joint Committee was conscious of the report to the Minister for Social Welfare of the Review Group on the Role of Supplementary Welfare Allowance in relation to Housing. However, this report was received on 17 January 1996. It was thus not possible to consider its full findings. Notwithstanding this, concern was expressed by members of the Committee about the sums being spent on rent allowances and whether it would be more efficient to allocate sums to local authorities to build houses.

The Joint Committee agrees the proposal by the aforementioned Review Group that there should be a minimum standard of accommodation where such is being funded by rent allowance through the Local Health Board.

3.4.Social Welfare and Young People

3.4.1.-The Joint Committee agrees the need for a study on the young people in receipt of Rent Allowance to pinpoint the problems and devising solutions on their living outside the family homes.

-All unemployed young people, should be entitled to at least the minimum social welfare unemployment assistance payment, irrespective of family income. This measure should encourage young people to remain in the family home.

3.4.2.Deciding Factors

If there are incentives for young people to leave the family home they can not be eliminated by simply reducing or abolishing the relevant benefits. The social welfare system must provide for young people who may be forced for one reason or another to leave the family home. Abuse of the system can be prevented by applying the guidelines already laid down by the Health Boards but the real solution to the problem lies in better provision for young people through alleviating poverty, creating employment and providing better opportunities and incentives for education and training.

In making this recommendation, the Joint Committee feels that there should, however, be an encouragement for young people to stay in the family home.

3.4.3.Education and Training

The difficulty of young people getting on approved apprenticeship courses was highlighted by members of the Committee. This is a complex area which would warrant a separate report.


3.5.1.The Committee recommends that a proportion of places on Community Employment Schemes and FÁS Training courses be reserved for those who may not be on the Live Register due to having been engaged in unpaid employment in the home.

3.5.2.Adult Dependents

The Department of Social Welfare response to the consultant’s interim report was:

“In relation to removing the concept of Adult Dependent, problems arise for consideration which are far more complex that the text might suggest.

Some of the issues for consideration in relation to removing the concept of Adult Dependent, include

the circumstances in which adult dependents are paid (i.e. the labour force status of the claimant partner),

means testing,

the position of people who currently qualify as adult dependents, but who would not qualify for any payment in their own right because they do not fit into any of the contingencies for which social welfare payments are made, and

the implications for work incentives arising from increases in adult dependent allowances.

Many of these issues were identified by the Review Group on the Treatment of Households under the Social Welfare system (Report 1990). Research relevant to this topic is also found in the recent study on income sharing published by the Combat Poverty Agency. (Rottman study).

In relation to the text of these pages - it is not always the case that a spouse or partner is classified as an adult dependent. For all payments except supplementary welfare allowance, a spouse partner who meets the conditions can claim in his or her own right, although, in some of the means-tested payments the overall payment to the couple is limited to the personal rate plus adult dependent allowance.”

3.5.3. PRSI Entitlements for Child Minding

The Department of Social Welfare responded to the interim report:

“...... what is involved is in fact, a disregard in the calculation of entitlements to pensions, of years spent out of the PRSI system, while caring for children or an incapacitated person. The ‘disregard’ also applies to those who provide full-time care and attention to an incapacitated or invalided person. It applies to all carers not just those receiving Carers Allowance”.

The effects of this will be that many carers that heretofore would not quality for contributory pensions will now have the years of child minding “recognised” and hence qualify for a contributory pension.

The Committee recognising the contribution of carers who work in the home welcome the introduction of this scheme and strongly recommend that retrospection should be phased in over a period.

3.6.The Elderly

The Committee agreed that State supports for the care of the elderly and people with disabilities in the home don’t reflect the real value of the service provided by voluntary carers or the heavy cost which would have to be borne by society if it had to take up the burden directly. Increases State support is undoubtedly warranted on economic criteria alone.

The Committee welcomes the announcement in the recent Budget of a 50% increase in the tax allowance available where a carer is employed to look after an incapacitated person. However, it is felt that the allowance should now be indexed so that it does not fall behind again.

In the light of recent concern expressed about attacks on the elderly, it is felt that the Department of Social Welfare should:

-look at the cash savings of the elderly in a more sympathetic way in their assessment procedures;

-adjust the assumed interest rate on savings for means testing to more accurately reflect prevailing rates;

-initiate a major education program on the entitlements of the elderly in all major areas affecting them. This should be an inter-departmental-program.

In calling for additional studies to be done in the area of care for the elderly, the Committee is aware of a proposed study to be carried out by the Joint Committee on Women’s Rights on “The Longterm Support Framework for Female Carers of the Elderly” which is targeted for completion later this year.

Approved by the Joint Committee on 7 February 1996.



Paul McGrath T.D.,


7 February 1996.