Thursday, 11 June 2015
Order of Business
I support Senator Norris in his suggestion that we have a debate on Dublin. The advances we have made when it comes to cycling and walking in this city are fantastic. At the same time, I agree entirely with Senator Norris. We do not have the climate, first and foremost, to be constantly on foot or bicycle in this country. While the ideal is that we would have people on foot and reduce congestion, we need to remember the motorist in the context of the overall debate on how we move around our city. I support Senator Norris in his call.
An issue I wish to raise briefly is that of inheritance tax. This is a matter we could usefully debate in the House. It has come to light recently that the rate at which the tax is imposed is the seventh highest among countries that are members of the OECD. The tax kicks in here at a much lower value than other western countries. By way of example, in Britain the exemption from the tax is set at almost £450,000 for one category while in Germany it is €380,000. This report shows that compared with the United Kingdom, a person here will pay far more when she inherits. In Ireland, the capital acquisitions tax is imposed at a rate of 33% on amounts over €225,000 for a son or daughter. The rate has soared from 20% in 2008 and the tax-free threshold has been cut in half.
This makes it all quite onerous on people if they inherit even a modest house. Families are suddenly being hit with serious inheritance tax bills this year as rising property prices push them over exemption limits. Revenue currently allows people to pay over a period but at an interest rate of 8% per year if families choose to pay by instalments. Given the sums involved, this can sometimes be quite large. A rate of 8% per year strikes me as onerous. Perhaps there is a case to be made for reducing the rate of inheritance tax, raising the level at which it kicks in or reducing the rate for interest on instalments. Certainly, it strikes me as rather punitive.
In any event, it is certainly worthy of debate. The reduction in the tax-free thresholds has resulted in even modest properties, particularly in Dublin, where house prices are higher, being hit with big tax bills. Many countries have recognised that estate and inheritance taxes are a poor source of revenue and some have eliminated these taxes altogether. It is worth noting that 13 countries have repealed inheritance tax, including Norway, which is hardly regarded as a tax haven. I would welcome a debate on the matter.