Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I addressed this on Second Stage. The section involves a measure that is costing the Irish State €22 million in the increase of the threshold for CAT. It is my view that there is already a generous threshold at €280,000 for group A. We know that if we were to apply this increase to the 2014 figures, the people who would have benefitted from it would have been 2,128 individuals in group A. The group A threshold is costing something like €18 million alone. It is a huge tax write-down for a very small cohort of individuals.

I understand that house prices in Dublin are obviously higher than the rest of the country. Anywhere else in the Twenty-six Counties outside of Dublin, the average house would be transferred to a son or daughter under the threshold and, in some cases, well under the threshold, as the average house price in some areas is about 50% of the threshold. Inheritance is one of the areas that leads to inequality. As the Ministers continue to refer to, this is a tax on wealth. However, by increasing the thresholds, what they are doing is increasing inequality. I believe there is no justification for this, given the pressures. This has to be set in the context of the other pressures in the economy. A small group of individuals benefitting from this is not the right way to do it.

There may be ways in which this needs to be tweaked. For example, when somebody is inheriting a family home, we always think about it in terms of property, but that is not always the case. This could be hard cash that is going into somebody's bank account. We allow for the first €280,000 of that to be tax free. There are scenarios, particularly in parts of Dublin, in which properties are being left to a child or a sibling that are in excess of €280,000. They might be cash-poor but become very much asset rich and subsequently have a difficulty in paying the CAT. We should come up with easier ways for them to actually pay for it, whether that is over a longer period of time or whatever. Despite the fact that it is a property and we think about it in that way, these people are not living in the family home. If they were living in the family home, it would be completely tax free, as we dealt with in the dwelling home exemption. At the end of the day, what they inherit is worth more than €280,000. They have inherited that tax free.

For many people, inheriting €280,000 is never going to happen. Coming into that amount of money would be like winning the lotto for some people. That is already tax free. To push it up to €310,000 is not appropriate. As I said, it is a small number of people who will benefit from it. I have the full breakdown of the number of individuals. The Government's proposal is to bring this up to €500,000. This is the wrong way to proceed. It would cost €75 million to do that. Sticking with what we have today, €22 million of a tax break for just more than 2,000 category A individuals located in Dublin is not the most pressing thing that we need to do with our revenue, which is scarce. We hear about pay restoration and the two-tier pay grades for nurses, teachers and all the rest. Some €80 million is needed for pay for equality. The cost of this proposal would go a quarter of that way. I am not suggesting one or the other. People who inherit €280,000 tax free, as it is only the portion above that that is chargeable at the CAT rate, are not the people who have the most pressing needs.

There are genuine cases out there, but we should not be introducing a law across the board. In my own county, for example, the average house price is half of the existing threshold, €140,000. Yet, a very wealthy mother or father in Donegal can now gift their child €310,000 tax free. That is the worst type of inequality. It is the passing down of wealth from generation to generation. There is a widening gap in Irish society; it is a global issue. This provision is definitely going in the wrong direction.