Derek McDowell (Labour)

My apologies for being late. I want to make a few general remarks about capital acquisition tax. They may came from a somewhat more nuanced perspective than others. Two or three years ago, during a break in the Committee Stage debate on the Finance Bill, the Minister turned to me and said he did not really understand why we were having the debate because he did not believe in inheritance tax and Deputy McDowell – as I then was – did not believe in inheritance. In a sense he was right, at least on the fundamental level.

The current Minister does not believe that we should, as he sees it, double tax people's income. He thinks that once they have earned something, they are entitled to do with it as they wish, be it endow their children or whatever else. My view is that inheritance is the way by which privilege and ownership of property cascade through the generations and effectively our class based system is maintained. Over time both of us have accommodated ourselves to various realities which has brought us closer than the distance between those two extremes.

I now accept that those who earn money, build up wealth and accumulate property expect, at least in part, to be able to pass it on to their children. I assume that at this stage the Minister accepts that there should be some contribution to the Exchequer from inheritance or capital acquisitions. While we disagree on matters of less fundamental principle, there are still very significant differences between the view of the Government and mine. I believe agricultural relief to be excessive, to say the least, but accept that this is of long standing and the Minister is not the one responsible for its introduction.

We need to widen the gap between gift tax and inheritance tax. In dealing with business and property generally, particularly economic assets such as farms, we should be actively seeking to encourage people to gift them to children at an earlier stage. If it is done before death, they can be used, in most cases, more productively than they might otherwise have been. We need to look again at the provision by which children can now inherit several hundred thousand euro in addition to the family home if they have been living there, which amounts to a great deal before tax becomes payable. We should also look at the provision whereby spouses can inherit anything at all. This should be limited to assets and property, of which the couple had enjoyment in common in order that business or economic assets would not benefit from the exemption.