Dr. Bert Brys:

The Deputy asked about best practice. I am hesitant to answer because Ms Perret is more informed about this. From reading our reports, Ireland has the best practice regarding the amount of money that can be transferred tax-free over a lifetime, unless I am totally confusing it with another country. To put it in broader perspective, the problem with gift and inheritance taxes, which have also become very unpopular in the OECD, is that they were poorly designed in the years when they were levied at high amounts, including the 1970s when they originated. They were levied at very high rates with very narrow bases. Again, they were a tax on people with low wealth and, in particular, the middle-income class, while the very rich did not pay much of that tax eventually because of tax avoidance opportunities.

It fits together with the role of capital income taxes. We believe that strengthening the design of capital income taxes, and well-designed inheritance and gift taxes, is important as part of the tax system. That needs to be done at rates that are not excessively high and, in the case of the examples the Deputy described, at rates that are not excessive. These rates should allow an amount of wealth to be transferred during someone's lifetime, or when one of the partners passes away, and should include a certain amount of extant wealth that is perceived as fair. We can give the Deputy information on that amount and what other countries do, although we cannot advise the committee on the decision that needs to be made. We should not start levying gift tax if, for example, €100 is given to someone. That does not make any sense of course. The actual tax-exempt amount is open for discussion. This is really Ms Perret's area. She can answer the Deputy's question better than me.