Dr. Barra Roantree:

I think the issue the Deputy raised was some of the options that are looked at in our report relating to retirement relief, which is a relief from capital gains tax, CGT. This is a similar relief to capital acquisitions tax - agricultural and business relief are mentioned - in that the intention is to benefit small businesses, but how the retirement relief operates is a big giveaway to those who are disposing of their businesses, and those businesses tend to be larger ones. The point to be taken from this is that it is not particularly well targeted.

We also raised the matter, and maybe this is what the Deputy was getting at, of relief from CGT at death. When a person who accumulates assets passes on, CGT is relieved at death and is not levied. We make the point, in this and in other work, that this system encourages individuals to hold on through retirement to a second home they might own and which they would like to bequest that to a child, because then CGT is relieved and they can pass on to that child an asset that might be worth more.

This draws on work that I and my colleagues, Anne Nolan and Keelan Beirne, did on this issue. It essentially creates a situation where elderly people who are quite well-off in terms of their assets - I am not referring to their main home; it could be shares or a second home - are incentivised by the tax system to hold on to the asset until they die, rather than selling it off and using those proceeds to have a better standard of living in retirement. That is the point we are getting at with regard to the relief at death.

There is also an interaction with the fair deal scheme which, in a way, goes in the opposite direction in the sense that if one thinks one will go into the fair deal scheme, one will want to get rid of one's assets at least six years before one enters the scheme. There is a big issue in this regard and we have hinted at it in some of our previous work. The fair deal scheme does not sit very evenly with the broadly well-designed system of capital acquisitions tax on which I responded to the questions of Deputy Aindrias Moynihan. Whereas the system of capital acquisitions tax is based on how much one inherits over one's lifetime, which is a good and sensible way of doing things and is certainly much better than the British system, the fair deal scheme operates in such a way that, essentially, the charge applies on assets that are held or have been disposed of within the past six years. This creates an incentive for people who, in the words of John Kay and Mervyn King in respect of the British system, are healthy, wealthy and well advised to just get rid of their assets to their kids earlier. There is an issue there in terms of the design of the fair deal scheme and how it sits with the capital acquisitions tax system. I hope that helps the Deputy on those issues.

I will say a few words on the broader issue of basic income. I know Dr. Collins has many views on it, not all of which align with mine. One point I will make on basic income is that it is often quite difficult to know to what people are referring in that regard. It can refer to a broad range of schemes and cover a significant range of things. If we are to have, essentially, a payment which distinguishes on the basis of need, that is, it pays more to people with a disability, elderly people or those who are out of work, then I am not sure it is very different to the current welfare system. Once one starts incorporating those differential needs across the population, one ends up at a better-designed welfare system that may integrate the various benefits that are currently available. There can be significant issues for people who have to claim different benefits from different agencies or as they move in and out of work. In a way, universal basic income could just be seen as a way of resolving those anomalies in the system and having a more integrated tax and welfare system. From that point of view, there is a lot to recommend that kind of line. However, we will need to retain differentiated payments for different needs and, from that point of view, I do not see much benefit in a payment that does not recognise the differential needs across the population.