Business

Childcare must be in ‘critical’ economic infrastructure in Government strategy, say accountants

Consultative Committee of Accountancy Bodies Ireland seeks Budget measures that reflect the true cost of childcare and provide flexible or part-time places to fit work patterns

Substantially more must be done on increasing supply and capacity in the childcare market, the Consultative Committee of Accountancy Bodies said in its submission. Photograph: Stock/Guido Mieth

Ian Curran
Fri May 10 2024 - 06:00

The Government must address the crisis in childcare in Budget 2025 to support working parents and increase participation rates in the economy, an umbrella for the accountancy industry has said, while also addressing the increasing cost and complexity for small and medium enterprises (SMEs) of doing business.

In a pre-Budget submission to the Department of Finance, the Consultative Committee of Accountancy Bodies Ireland (CCAB-I) – an industry forum comprising Chartered Accountants Ireland (CAI), the Association of Chartered Certified Accountants and the Institute of Certified Public Accountants – has also called on the Coalition for new exemptions from Employers’ Pay Related Social Insurance and a reduction in the Capital Gains Tax rate.

“We are encouraging the Government to take a holistic review of the tax system to identify areas where meaningful reform is possible to help build capacity in the economy,” the group said. “At the same time, Government policy must take steps to enhance the opportunities for indigenous Irish businesses to grow domestically and also compete on European and global markets.”

One the significant capacity constraints identified by the committee is childcare provision. Citing a survey of CAI members from the second half of last year, CCAB-I said difficulty in obtaining a place in childcare was flagged as the biggest issue affecting working parents, with 97 per cent of accountants having considered adjusting their working patterns to meet childcare responsibilities.

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“Substantially more must be done on increasing supply and capacity in the market,” it said in its submission.

The group is calling for the Coalition to commit to a Government-wide “long-term strategy, which recognises childcare as part of the critical infrastructure necessary for the functioning of the economy.” Among other things, CCAB-I said funding must reflect the “true cost” of service provision in the sector and encourage the availability of flexible or part-time childcare places to reflect current work patterns.

The childcare services relief – introduced in 2006 to exempt income earned by individuals providing child-minding services in their own homes – should also be modernised, the committee said.

“Income up to €10,000 was initially exempt but this was increased to €15,000 in the following Finance Act 2007. The relief has not been updated since then.” CCAB-I said the limit should be increased to €20,000 per year, the cost of which would “be more than offset by increased tax revenues resulting from an increased number of parents re-entering the workforce”.

Meanwhile, the accountancy group is also calling on the Government to support SMEs against a backdrop of “rising labour costs, increased regulation as well as skills shortages”.

“In 2024 alone, the minimum wage has increased by 12 per cent and the additional sick leave entitlements have added 1 per cent to payroll costs,” it said. “From October 1st, the rate of Employers’, Self-Employed and Employee PRSI will increase by 0.1 per cent. Pensions auto-enrolment will add a further 1.5 per cent in costs during 2025.”

Among other things, the Coalition should adjust employers’ PRSI thresholds, exempting weekly wages up to €495.30 from the tax, CCAB-I said, and reduce the rate of Capital Gains Tax from 33 per cent to 25 per cent to “drive a surge in business and personal transactions to bring additional funds into the exchequer”.

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times

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