New civil unions will cost taxpayers over €25m

The Irish Independent By Fionnan Sheahan, Political Editor The taxpayer will pay at least €25m for opening up married tax benefits to other couples when new civil partnerships comes into effect. The introduction of the controversial Civil Partnership Bill will have cost implications for capital taxes and social welfare payments. Documents obtained by the Irish Independent show the Department of Finance estimates the initial cost of the Bill to be €25m per annum as co-habiting couples in a civil partners will have to get income tax benefits. The cost implications cast doubts over the Government’s timetable for bringing forward the legislation to give legal recognition for both same-sex and opposite-sex couples. The documents also show the Government estimates 10,000 couples will enter civil partnerships. But the most recent Census shows co-habiting couples are the fastest growing family type in the country. Census 2006 showed the total number of co-habiting couples was 121,800 — up from 77,600 in 2002. And almost two-thirds of them were couples without children. Co-habiting couples represented 11.6pc of all family units in 2006 compared with 8.4pc in 2002. In the present economic climate, the cost implications of the partnerships may delay its implementation. The Bill has been criticised for being derisory and limited, for being incompatible with the Constitution, and for diluting the status of marriage. The Department of Justice says it won’t delay the introduction but the Department of Finance did not respond to queries on the same question. In a briefing note prepared for Finance Minister Brian Lenihan when he took over the job, the Department’s Taxation Division warns of the cost implications of the “recognition of relationships other than married relationships”. “In the medium term, developments in social policy may lead to formal recognition of relationships other than married relationships — both opposite- and same-sex co-habitants. There is a commitment in the Programme for Government to legislate for Civil Partnerships at the earliest possible date in the lifetime of the Government. This could have implications for the tax treatment of such couples including costs (latest estimate is about €25 million per annum to give married income-tax treatment to 10,000 couples; there would also be costs in relation to capital taxes).” The Department has further information on these tax implications which it regarded as too sensitive to release publicly, so this part of the document release was blacked out. The Government has claimed the tax status of civil partners will be sorted out after the legislation is passed in a subsequent Finance Bill. Despite there being ample evidence in the Department of Finance of the tax implications of the move, ministers claim it doesn’t have to dealt with at this point. Justice Minister Dermot Ahern’s spokesman said his department estimated only 2,000 couples who will avail of Civil Partnership. “There is a commitment in the Programme for Government to introduce the legislation. I don’t see any difference in the timeframe,” the spokesman said. Civil Partnerships won’t come into effect for another year, at the very earliest, as the final legislation has yet to be published and then passed through the Oireachtas. Married couples are entitled to several benefits under the tax system: Income Tax: Ability to transfer unused credits, reliefs, unused bands. Capital Acquisition Tax: Exemption in respect of inheritance and gift tax. Capital Gains Tax: Transfer of capital losses and exemptions on transfers. Stamp Duty: Relief from normal rates on transfer of assets. On the income-tax front, the Department of Finance says married couples are entitled to avail of special income-tax reliefs such as joint assessment. The Department of Social and Family Affairs says the introduction of Civil Partnership will have consequences for co-habiting same-sex couples, and could result in a reduction in payment of social assistance.