Thursday, 18 November 2021
Department of Finance
As the Deputy may be aware, Capital Acquisitions Tax (CAT), including gifts and inheritances, is a tax on unearned wealth. It is recognised that effective taxation of capital is an important tool for addressing income and wealth inequality. Therefore, gift and inheritance taxes, including the efficient use of relief thresholds, are fundamental elements of using our tax code to help create a fairer society.
There have been many increases to the CAT thresholds in recent years. The Group A threshold was raised from €225,000 to €280,000 in Budget 2016, to €310,000 in 2017, to €320,000 in Budget 2019 with a further rise to €335,000 in Budget 2020.
The Group B threshold rose from €30,150 to €32,500 in Budget 2017 and the Group C threshold rose from €15,075 to €16,250 in Budget 2017.
You will appreciate that there would be a significant cost in making further substantial changes to the Group A, Group B and Group C thresholds. For example, recent Revenue estimates indicate that the cost of increasing the CAT A threshold from its current €335,000 to €400,000 would be €35 million, the estimated cost of increasing the CAT B threshold from its current €32,500 to €35,000 would be €6 million, and the estimated cost of increasing the CAT C threshold from its current €16,250 to €19,000 would be €3 million.
The options available for providing increases to CAT thresholds need to be considered in the context of available resources and must be balanced against competing demands.
At the moment, I do not believe that a compelling case can be made for increases to the CAT thresholds. Therefore, I have no plans to increase the category A, B or C Group CAT thresholds.