Sharon Keogan (Independent) | Oireachtas source

I thank the Minister of State for coming in here this morning. I rise to address a matter of significant concern for many of our constituents: current capital acquisition tax thresholds and their potentially discriminatory impact on childless adults and non-nuclear families.

The capital acquisition tax, CAT, threshold determines the amount of inheritance or gift that can be received tax-free based on the relationship of the disponer, that is, the giver of the inheritance or gift, to the recipient. As of the last budget, the categories were reformed as follows: €400,000 can be inherited tax-free by children, who are category A; €40,000 can be given to siblings, nieces, nephews and linear descendants, who are category B; and it is €25,000 for all other cases, category C. Ignoring the last category for a moment, let us focus on the sheer disparity between the first two categories. The tax-free allowance for category B is one tenth of that for category A. To put it in more concrete terms, if I gift or will a house worth €300,000 to my son, he will pay no tax on that, whereas if I willed it to a grandchild, they would have to pay €82,500. These thresholds create a hierarchy that favours parents over childless adults and grandparents, who cannot pass on the same value of assets tax-free to their loved ones. This issue has been brought to my attention by constituents who feel the system is discriminatory and unfair.

I will share the story of a constituent who inherited his parents' house and paid €165,000 in inheritance tax. This constituent, who is single and childless, now wishes to pass on the house to his nephews or nieces but faces the possibility that they will be unable to afford to inherit it due to the tax burden they would face. If he had children, there would be no inheritance tax due, which highlights a truly unacceptable disparity and unfairness in our system. In another case, a young man and his partner have recently moved into their first home, which he inherited from his grandmother. What could have been a very happy occasion in his life was overshadowed by the fact he faces paying off a loan for the next ten to 20 years to cover the tax bill. This is because he happened to be two generations removed from the disponer instead of one.

The principle of equality before the law is enshrined in our Constitution. It is our duty to ensure all citizens are treated equally, regardless of their parental status. The current CAT threshold appears to violate this principle, discriminating against people and creating huge financial hardship for loved ones simply because they are not immediate children. It leads to the State extracting huge amounts of wealth from assets that have often been saved and invested in over the lifetime of childless adults. This is at a time when many families have changed from the straightforward nuclear model and relationships are not as clear cut and uniform as they used to be.I ask the Minister for Finance whether any action or investigation is being undertaken to review whether the current CAT inheritance tax categories constitute a form of unconstitutional discrimination. Furthermore, I ask if the Government is taking steps to reform the tax system to ensure real fairness and equality for all citizens. Last year's reforms simply do not cut it. This is a time for us to address the issue and ensure our tax system reflects the values of equality and fairness. I look forward to the Minister for State's response. I hope we can work together to bring about meaningful reform for the benefit of all our constituents.