Finian McGrath (Dublin North Central, Independent)
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58. To ask the Minister for Finance if he will support a matter (details supplied) regarding inheritance tax; and if he will make a statement on the matter. [38600/15]

Michael Noonan (Limerick City, Fine Gael)
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Capital Acquisitions Tax (CAT) applies to the beneficiary of a gift or inheritance rather than to the person making the gift or inheritance. While the rate of CAT is 33% each person has a number of life-time thresholds for gifts and inheritances which they can receive tax free. These are based on the relationship to the person who has made the gift or bequest. The 33% rate of CAT applies on assets received by a person above the relevant threshold.

Over the last number of years the CAT thresholds have been reduced a number of times, while the rate has been increased. These changes were necessary in order to maintain the yield from capital taxes in a period of falling asset prices so that such taxes would continue to make a contribution to our efforts to consolidate the public finances.

As part of Budget 2016 I raised the Group A threshold applying to gifts and inheritances from parents to their children from €225,000 to €280,000. This represents an increase of about 25%. I did this in recognition of the improving state of the national finances and of the concerns expressed to me by people making and receiving gifts and inheritances, particularly in a context of rising property prices.

In allocating limited resources for the Budget choices had to be made between different areas. As the economic recovery continues to take hold, I began last year to focus available resources on reducing the burden of taxation on earned income and take-home pay where high taxes impact on competitiveness, economic growth and job creation. That continued to be my main focus in this latest Budget. An important consideration in these matters is the view of the OECD, supported by our own economic research, that taxes on property and other fixed capital, such as CAT, are less harmful and distortionary to economic growth than taxes on work or consumption.

I have, however, indicated that I see the change to the Group A tax- free threshold in this year's Budget as the start of a process. Provided, among other factors, that our economic recovery continues, I will examine the scope for further improvements in the tax-free thresholds in the future.