Jonathan O'Brien (Cork North Central, Sinn Fein)
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The Minister indicated that he would raise capital gains tax by 5% but he did not provide a figure for what would potentially be raised.

Richard Bruton (Dublin North Central, Fine Gael)
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I beg the Deputy's pardon. It is €81 million in 2012 and €83 million in a full year.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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It is probably a missed opportunity because if we had increased the rate by another 5% we would have brought in €165 million which would have off-set some of the cuts to child benefit proposed by the Government. The measure does not go far enough.

I inquired previously about the holiday on capital gains tax of seven years for property buyers. Does the Minister agree that it is a dangerous move because in conjunction with the previous resolution on stamp duty it could give rise to property speculation again whereby people could buy up property, sit on it for seven years and benefit from the capital gains tax holiday?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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It is wrong that these measures are grouped together.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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I agree.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The resolutions contain measures that I would broadly support, although I would have questions about them even where I support the principle. In so far as we are talking about increasing taxes on capital gains, when one is talking about people who have lots of capital and assets to hand on, then people should be taxed to a significant extent. It is an inadequate measure in the direction of the more serious measures we in the United Left Alliance proposed for a wealth and assets tax. However, at least it vaguely points in the right direction. I wonder why there are no bands to discriminate between people with lots of money and assets to hand on and those who are just ordinary members of the public who have a few quid or a small amount of assets to hand on to their family. We should have bands that discriminate between those who have a lot and those who have a little in terms of applying extra taxation.

By the same token, I am worried about the DIRT tax because it affects the small saver, the ordinary person, who is putting a few quid aside for their children. The tax does not distinguish between them and people who have lots of money and who should be taxed significantly.

I have the same concern about applying extra tax to life assurance policies and investment funds. Will the Minister elaborate on the application of the tax? Does it refer to all life assurance policies and all investment funds because, again, I know some ordinary working class people who got a few bob in redundancy payments or from another source and the bank advised them to invest it in a particular investment fund to gain interest. That could literally be their life savings. I do not like the idea of them facing increased taxes but when one talks about the bulk of hoarded assets and savings in the hands of a tiny minority that has vast amounts of wealth and assets, as we outlined in our budget submission, the latter group should face significantly higher extra taxes than what is being proposed, much of which is tokenistic but may inadvertently hurt the small saver or investor in a life assurance fund. I am concerned about those issues even though some of the measures are vaguely progressive. I would welcome more elaboration on the resolutions by the Minister. Unless I get support from the House it is probably not worthwhile calling a vote on this. However, other Deputies may wish to comment on my views or the Minister may wish to refute the concerns I have raised.

Seán Crowe (Dublin South West, Sinn Fein)
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The Minister proposes to reduce the inheritance tax threshold from €333,084 to €250,000. This is an issue which many people face at some stage in their lives. Many people who are listening to this debate may be interested, and perhaps worried, about this measure. How was the figure of €250,000 arrived at?

In many cases a family home, valued at approximately €300,000 may be inherited by children. Does the threshold apply to an entire family? If the home is inherited by two or three siblings does the threshold apply to each sibling? This is an important issue because many people face this situation at some time in their lives, or may be facing it at present. Rather than create more worry for bereaved families, could the Minister expand on this matter?

Richard Bruton (Dublin North Central, Fine Gael)
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Deputy Jonathan O'Brien spoke about the cut in stamp duty and the provision whereby a person who buys a property now and keeps it for a certain period can get a holiday from capital gains tax.

The property sector has collapsed and with it activity in the construction sector has dropped by approximately 90%. There has been a huge lay-off of employees in this sector and it is operating far below what would be standard in an economy of our size and activity. In the present market conditions, there is no fear of property speculation, with people chasing rising prices and a false boom being created. Our difficulty is the opposite. There is no confidence to come into the market and no one is buying. That has knock-on effects.

Other Deputies raised the issue of NAMA. If NAMA, which is charged with the responsibility for recovering for the taxpayer as much as it can from the loans it holds, is faced with a dead property market the taxpayer loses out. However, I see no fear of what has been suggested in this regard. Subsequent budgets can always look at these aspects again.

In the past, people felt the boom would go on forever. Even when we went far above standard relationships between property values and incomes, people were still cheerleading the boom and saying property could not fail. We are in a different climate now. These are cautious measures which will restore confidence to a sector which is very important to many people's futures.

Deputy Boyd Barrett raised the issue of a progressive scale within the capital acquisitions tax. There has always been a steep rise in the basic rate of capital acquisitions tax and a progressive reduction in the thresholds people enjoyed. It has been a relatively simple structured capital tax and has, by and large, applied the same rate as the capital gains tax. In recent years the rate has gone from 20% to 30% and the exemption threshold has come down very dramatically from approximately €500,000 to about €250,000. This has made the tax more progressive. Where the inheritance or gift is significant a large part of the sum is taxed at 30% whereas previously there was a significant exemption threshold and a much lower rate. This will extract much more revenue from inheritances than has been the case in the past.

Capital acquisitions tax has been designed so that the progressivity is related to the relationship of the giver to the receiver. The threshold for an inheritance of a child from a parent is €250,000, for a inheritance of a nephew from an uncle it drops to €33,000 and for a gift from an unrelated person the threshold is €16,000. The more distant the relationship the lower the threshold. The structure has a fairness built into it, even though it is not a traditional progressive rate.

Deputy Crowe asked why the €250,000 threshold was arrived at and mentioned the family home. The threshold is pitched at a level where a modest inheritance from a parent to a child would not be hit. Each child enjoys the threshold. If a house that is worth €400,000 is divided between two children neither of the children will pay any tax on the transfer of the home.

The figure of €250,000 reinstates the relationship between group A - parents and children - and group B - uncles and nephews, for example - which applied in 1999. I do not know if that is why the figure was arrived at, but that is what it does. During the years when the tax was watered down, particularly when Deputy McCreevy was Minister for Finance, the thresholds and rates became much more favourable to inheritances by children from parents than to inheritances by nephews from uncles. This undermined the entire tax, because most inheritances pass from parent to child. By bringing this threshold back into the relationship it had some years ago we will generate more revenue. It is expected that 30% of the revenue will come from group A, even though they have massively higher thresholds. This measure is designed to get even more from estates.

In the case of the transfer of a business the tax code allows for relief to keep the business intact. The transfer of stocks and shares gets the full brunt of the tax whereas the transfer of a going concern from a parent to a child would pay a lower tax. There is a fairness built into the measure.

Deputy Boyd Barrett raised the issue of DIRT. One can argue about how interest should be taxed. Some people would argue that it should take account of inflation. The DIRT system was introduced because it was decided that the simplest administration was to have an across-the-board tax on all interest which was easily collected by the Revenue Commissioners. It was a full and final settlement. That resulted in the flat rate. It was a simple way for Revenue to collect tax from bank deposits. If people are generating other investment income they pay on a progressive scale in accordance with the normal income tax rate. The super wealthy are less likely to have money in bank deposits or in life insurance products than ordinary people. DIRT was seen as a fair way to get a full and final settlement in respect of the types of investment ordinary people choose. More sophisticated investors, who would be in stocks and shares, would pay tax at their normal marginal tax rate, which would be 41% plus PRSI and whatever else applied. That is my understanding of the origin of the DIRT. What this proposal does is impose a uniform rate of 30% across CAT, CGT and DIRT and settles the minimum tax people must pay. People can no longer, unlike under the regime introduced some years ago, use allowances to reduce their incomes to a level at which they will pay no tax. People above a certain income may reduce it only to a level at which they must pay 30% on the income. That same rate applies across the board. The tax applies uniformly and is seen as an efficient way to raise tax.

Michael McGrath (Cork South Central, Fianna Fail)
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I am sure I am missing a simple point, but it is late. With regard to the change in the thresholds relating to CAT in financial resolution No. 9, the Schedule we got today states it is reducing the group A tax free threshold from €332,084 to €250,000, but in the resolution the figure is different. Is that because of a linkage or reference point?

Richard Bruton (Dublin North Central, Fine Gael)
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It is the reference point. The year 2003 is the reference point.

Michael McGrath (Cork South Central, Fianna Fail)
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Okay, it is a reference point issue. On financial resolution No. 11, which relates to DIRT, I received an e-mail from someone recently who argued that DIRT should be extended to some of the An Post products, such as savings bonds and saving certificates. I am not making that argument, but the person who e-mailed cited a figure that I cannot recall now, but which would yield huge revenue for the State if DIRT was extended. Has that ever been considered and has the Minister an estimate of what it would bring in?

Richard Bruton (Dublin North Central, Fine Gael)
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My understanding is that the 2003 Act is the parent Act and indexation applies to this allowance. Effectively, the difference between the €183,688 and the €250,000 is the indexation since 2003 to 2011. I do not have the answer to the question on An Post products, but I presume that savings bonds, being an An Post product, were given a tax free status, much like that Government paper has. I suppose this was to encourage people to lend to the Government for infrastructural projects or whatever the Government is doing. They are sold on the basis they are tax exempt. That has been their selling point and, obviously, they allow the Government raise moneys a little more cheaply.

Michael Kitt (Galway East, Fianna Fail)
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In accordance with the order of the Dáil of this day, I am now required to put the question.