The Treasurer, Peter Costello, considered the move ahead of this year's budget, but won't reveal how much it would have cost.
The government has instead given families a thirty per cent rebate on their childcare expenses.
But Mr Howard has told Sky News, any change to the current system would disadvantage mothers who choose to leave the workforce and look after their children at home.
“I think if you make it tax deductable over and above the existing benefits, some people who don't have a need for childcare might well say that the government has gone too far- particularly, people who choose to provide their own childcare by dropping out of the workforce and looking after those children at home when they're very young,” Mr Howard said.