CHANGES TO HOW Irish couples were taxed in 2000 has led to an increase in the number of married women in employment.
According to the Economic and Social Research Institute (ESRI), the employment rate of married women increased by about 5 percentage points as a result of the reform which moved to a more individualised set of rules.
Up to 2000, Ireland had a system of joint taxation, which allowed a working spouse to use the tax allowances, credits and bands of a non-working spouse.
This imposed a higher tax rate on the non-earning spouse if they joined the labour market, making it less likely that they would take up employment.
Budget 2000 introduced the partly individualised income taxation system through a non-transferable element of the standard rate band.
According to the ESRI, this increased the financial incentive for non-working spouses to work.
It added that the international trend in recent decades has been to move towards individualised taxation systems.
The author of the report Karina Doorley said: “This analysis indicates that the partial individualisation of the Irish taxation system achieved one of its stated goals, to increase the incentive for spouses to join the labour market.”
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