Dr. Barra Roantree:

We are hoping to do some more research looking at that but every euro added onto it is quite effective at reducing the number of pensioners who are at greater risk of poverty and inadequate income in retirement. Again, the appropriate living standards deemed adequate for different age groups is really a political issue and one I do not believe the ESRI can come in on. We can say, however, that increasing the living alone allowance will do a lot to reduce poverty among pensioners.

That is far as we can go without stepping into the normative realm.

In terms of capital acquisitions tax, inheritance tax, and houses, which the Deputy mentioned, we highlight in our report that the average liability for a group A payer, that is, from a parent to a child, in 2019 was almost €86,000. This implies that the average group A taxpayer received almost €600,000 worth of inheritance or gifts from his or her parents over his or her lifetime. The first important point to note is that most people who pay inheritance tax or capital acquisitions tax in Ireland receive a large amount of inheritance. It is a lot larger than most people know about. To the extent to which those bands and thresholds are raised, most of that gain goes towards those people who receive a huge amount of inheritance. From that point of view, it is not a well-targeted measure towards those whom the Deputy might be worried about who are receiving a home in the context of increased house prices.

People often compare the €325,000 threshold with the average value of a home in Dublin and say it is less than that amount. This is a per-person threshold. Inheritance tax in Ireland is broadly well designed. It is based on the person receiving the gift rather than the estate giving them. From that point of view, it is an infinitely better system than that which operates in the UK, for example, where it is incredibly easy to avoid inheritance tax. If a person transfers gifts seven years before he or she dies, no tax is paid. From that point of view, our system is well designed. The threshold is on a per-person basis. Unless a person is a single child inheriting a house, it is unlikely that he or she is will pay capital acquisitions tax on that. For example, if a family has a house worth €900,000 and they have three children among whom they spilt it equally, none of those children will pay capital acquisitions tax. The extent of the issue is often overplayed. I am not sure it is taken into account that when people pass on an estate, it is usually to multiple beneficiaries. From that point of view, it is overplayed somewhat.