Childcare tax credit ‘would not work’, sector warns

Care providers have warned that neither parents or children will benefit if a childcare tax credit forms part of a deal between Fine Gael and Fianna Fáil on the formation of a government.

Teresa Heeney, chief executive of Early Childhood Ireland (ECI), a representative body for the childcare sector, said she was concerned about reports that any arrangement between the parties would include a possible tax credit for parents of preschool children.

She said the Fianna Fáil-backed proposals reportedly under consideration would be populist but inequitable and would not address serious issues affecting childcare providers.

Ms Heeney stressed that international evidence as well as blueprints prepared for the outgoing administration suggested tax credits given to parents of preschool children “simply do not work”.

She said direct subsidies to the childcare sector “work on two levels. First they drive quality, as the money depends on certain standards being reached, and then that subsidy is passed directly on to parents. There is a double dividend.

“With a tax credit, however, the Government would spend all the money that is available but nothing would go directly into services.

“A tax credit cannot be targeted at families who need it the most, and the most well-off would end up as the largest beneficiaries.”

Childcare costs more in Ireland than in almost any other country in Europe, and it can account for as much as 40 per cent of parents' disposable income, compared with an EU average of just 14 per cent.

At present, the vast majority of parents do not receive any specific childcare subsidy until their children become eligible for the Early Childhood Care and Education scheme.

Childcare scheme

In talks with Independent TD Katherine Zappone, senior Fine Gael officials pledged to introduce a new affordable childcare scheme for children of working parents aged between nine months and three years.

The commitment states an annual subsidy would be paid directly to centre-based childcare providers and registered childminders for children of this age range.

The size of the subsidy under consideration is about €2,000 per child per year, or €20 million total per year.