Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

There has been a great deal of media commentary on this section. That commentary has stemmed from Arthur Cox, a law firm with many clients at the top levels of Irish society. I am not sure that they are sons or daughters whose parents are passing small or moderate amounts of money on to them. However, that does not take away from the issues with this section of the Bill that have been genuinely or otherwise highlighted.

As with other matters that we addressed on Committee Stage, Revenue has issued guidelines on how this process will apply, but there is a degree of uncertainty about it. As Deputy Michael McGrath stated, if this is a question of closing the loophole, and keeping in mind what Revenue or departmental officials have stated about people trying to make cash payments of €150,000, such transactions should not be allowed. It is as simple as that. There is probably an ideological debate to be had about whether the State should interfere if a parent wants to give something to a child. It could be genuinely argued for, although I would disagree. Aside from that, I also disagree with the idea of taxing a parent's provision of lodgings, small gifts and small supports to a child, which I understand is not the intended case.

The debate has entered into a wider field to address the appropriate threshold to tax children's inheritance from their parents. I assume the reverse would be applicable like it currently is, with a threshold of €225,000. I actually believe that this threshold is fine. It has to do with the debate of whether there should ever be a tax on a transfer from a parent to a child. The high thresholds of the past were inappropriate.

There are ways around paying inheritance tax, for example, if one lives in a house or apartment for a number of years before being gifted it, establishing of trusts, etc. People are constantly availing of these methods. Those who are well-off and have multiple properties can avail of the expertise that allows them to do this. However, exempting €225,000 from inheritance tax is fair. Property prices are escalating rapidly, for example, by more than 25% and 23% this year for apartments and houses, respectively, in the capital city and by 16% across the State. We need to remain cognisant of that situation, but increasing the thresholds because of the possibility of an emerging property bubble is not an appropriate Government response. Rather, we must deal with the issues underlying the rapid increase in house prices.

When someone inherits something from a parent, although the first €225,000 is exempt from tax, it remains an asset for that person. It is not his or her family home. Rather, it is a rental property or a property that he or she will sell on regardless. It is sometimes suggested that inherited properties are kept as shrines to mothers or fathers. That may be the case in some scenarios, but the properties are sold in many cases and the benefit accrues to the children. Deputy Shatter argued that to do this would be to tax them twice. I have difficulty trying to find anything that is not taxed twice. If a company down the road creates a bar of chocolate, we tax the company on the supplies needed to make it, we tax the company on its profits, we tax the shop the bar is sold in, we tax the consumer who buys it and, when the wrapper is disposed of, we tax the waste company. Anyone who understands taxation will know that the bar is taxed approximately eight times. Inheritance tax should be no different.

Reverting to the substantive issue, we need clarity on the questions raised today about whether this section of the Bill will be too burdensome. Will it achieve the Department's stated intention of closing a loophole or can it be abused by penalising those parents who support their children in modest ways? I hope the Government's aim for this section is not the latter, but to clamp down on those who use the loophole to transfer substantial amounts of wealth to their children without paying tax on same.

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