Friday 22 June 2018

Charlie Weston: Rethink needed to facilitate rise in dual-earner couples

Backlash: Charlie McCreevy with the 2001 Budget
Backlash: Charlie McCreevy with the 2001 Budget
Charlie Weston

Charlie Weston

If only it was as simple as tweaking the tax system, then we could do that and more women would enter the workforce.

Women, far more than men, face a multitude of competing demands that often make it impossible for them to take up paid work outside the home.

Ireland is the joint most expensive country in the world for childcare, sharing that dubious title with the US, and most of the childcare burden is borne by women.

This largely explains why we have a low proportion of women in the workforce compared with the rest of the European Union.

Other reasons include the fact women may have an elderly parent to mind, a situation not helped by the limited State supports for the elderly to stay in their homes.

There are no tax reliefs for employing someone in the home to help with parents to cope with childcare costs.

Then there is the high cost and hassle of getting to and from work for those in cities.

Former finance minister Charlie McCreevy set out to change the situation that meant it was not financially worthwhile to take up paid employment. In 2000 he introduced, over the course of two budgets, tax individualisation - a situation where two working couples can pay less tax overall than a single earner couple, even if the overall income level is the same.

It was greeted with shrieks of horror, as it was seen to be penalising those who work in the home. The backlash forced him to row back on full individualisation.

But the changes he did implement seem to have had the effect of getting more women to take up paid employment. Just after the changes there were around 55pc of married women working outside home. This was up from 50pc, according to a study by the Economic and Social Research Institute's Karina Doorley.

But what has not been investigated is the extent to which the tax changes contributed to the build up of the property bubble.

Dual-earner couples were now tooled up to borrow more and buy bigger homes.

This has been cited as one of the key reasons for the property balloon going up, and eventually bursting.

Two salaries were needed to service the jumbo mortgages. The downturn hit and one of the earners lost their job. This made the mortgage situation a mess, not to mention the impact of negative equity.

Yes, we need more women in the workforce, especially with an ageing population, associated rising healthcare costs and lower fertility rates.

But tax is not the only issue. Getting more women into the paid workforce requires a large number of changes. It is something that we as a society need to think about again.

Irish Independent

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