Childcare tax breaks ‘may be a step in right direction’

Health Minister Leo Varadkar has not ruled out the possibility of introducing childcare tax breaks for struggling families, despite Children’s Minister James Reilly effectively rejecting the move last week.

Childcare tax breaks ‘may be a step in right direction’

Mr Varadkar believes the cost of creche and early years services will be an election issue as some parents, every year, are paying the equivalent of their annual mortgage bills for the vital support.

While noting the need for caution on the potential unintended consequences involved, he said the Government “would not rule out” tax breaks for these parents in a bid to help them with their financial needs.

Speaking on RTÉ’s Claire Byrne Live, Mr Varadkar said the approach may be “a step in the right direction”. An inter-departmental Government group is currently considering the measure.

During a two-day private member’s motion put down by Fianna Fáil’s Robert Troy last week, Mr Reilly said the move should not take place.

Responding to calculations last week by Mr Troy that a tax relief approach could see struggling parents gain €5,000 a year in their pockets, Mr Reilly said in reality this may only benefit the rich and be wiped out by linked facility cost increases.

Mr Reilly said the suggestion was short-sighted, saying while creche tax breaks are often discussed, clear evidence from the OECD showed that, if introduced, they would only benefit better-off families.

He also said the issue was currently being examined by a Government group consisting of the Departments of Health and Children along with Public Expenditure and Reform, but stressed he did not believe it was in the long-term best interest of parents of the 68,000 children currently in creche and early years services.

During the Dáil debate, Mr Troy said the move must be considered immediately as some families are spending up to €16,000 — the “equivalent of a second mortgage” — on creche services a year.

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