Peter Mathews (Dublin South, Independent) | Oireachtas source

I am saying it in a respectful way. The Minister of State cited some anonymous examples but these actually are real-time examples. In addition, as Deputy Shatter pointed out, the threshold has come down from €542,000 in 2009 to €225,000 now and one is told there has been a recovery in asset prices. While I can demonstrate that is exaggerated, the entire thing appears to be driven by some kind of agenda that is not being declared openly. For instance, if one takes the example of somebody who has accumulated capital of €100 million, it could reasonably be expected that the home or residence element of that €100 million net might be €2 million, €3 million, €4 million or €5 million. As that would be reasonable accommodation for a family, the rest of the capital that might be left to family members is what one calls mobile capital.

Such capital has easy market realisation. On the basis that it is a gift, this would be taxed at a rate of 33%. This means that for the super-wealthy, the rate of tax on the exposed amount of assets is the same as that which applies to someone with a modest level of capital of, for example, €500,000. A house in a modest suburban area of Dublin which is inherited by one child could easily realise a value of €500,000. Some €275,000 of this amount would be exposed to tax at a rate of 33%. Multimillionaires would be taxed at the same rate. On a capital taxes basis, this provision is somewhat regressive as a result of the exemption limit being brought so low as to correspond with prices on the secondary housing markets in Dublin and Cork.

There is a need for an open discussion on this matter rather than seeking to separate out the complexities of and the subscript algebra relating to the tax. The problem with taxes in this country is that they are too complex. Deputy Creighton referred to the taxes which new businesses in the start-up or early growth phase must pay. Those taxes are depressingly complex and severe in nature. The authorities in the United States give much greater recognition to the framework parameters required in the area of taxation, regardless of whether it is income, capital or capital gains tax. In his book Capital in the Twenty-First Century, Thomas Piketty highlights the fact that the returns to capital are far higher than those brought about by labour or individual personal effort. As a result, those with super-accumulations of capital are much more capable of bearing taxation and contributing resources to exchequers.

Efforts must be made to consider the bigger picture in respect of this matter. When one gets down to examining the nitty-gritty arithmetic involved, one can almost become depressed. An exemption is suddenly being introduced in respect of farms that are either on or near the borderline of the €225,000 exemption. That is because one does not want people to become discouraged and leave the land. Neither does one want to break up holdings which are small enough in any event. As a result, those involved are given an exemption. What is the difference in this regard in terms of the capital platform of €150,000 or €200,000 that might be needed by the members of a family who have grown up and attended school in the suburbs - accumulating the language and skills of business along the way - in order to start a business? That money will be taxed at 33% before the business even gets off the ground.

These matters must be given due consideration. There is no evidence to convince me that there is good thinking behind the provision in the Bill. As was the case with water services, the message has not emerged.

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