‘No appetite’ to cut tax-free inheritance limit, Taoiseach says

Taoiseach Micheál Martin has said he does not believe there is an appetite to reduce the threshold for the amount of money people can leave to their children tax-free.

He said people pay tax throughout their lives and there an issue with the fairness of the proposal.

Mr Martin poured cold water on the idea as he spoke to reporters ahead of the Fianna Fáil pre-Dáil think-in meeting in Mullingar.

The issue of inheritance tax arises in a report by the Commission on Taxation and Welfare due to be published later this week.

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It is reported to include a proposal that there be a “substantial” reduction in the tax-free threshold for the sums parents can leave to their children.

Currently under Capital Acquisition Tax (CAT) rules children can inherit €335,000 tax-free.

The Irish Independent reported the commission has suggested the threshold should be lowered over time to be closer to the sums other family members can leave tax free - €32,5000 in the case of other close family members and €16,250 for distant relatives or friends.

Mr Martin suggested there is little desire in the Government to reduce the threshold in relation to parents leaving money or property to children.

He said: “Many, many families and family homes I think would be disadvantaged by that.

“We’re talking after all about people who have bought family homes with after-tax income.”

Mr Martin said people pay taxes throughout their lives in what he called a progressive taxation system where the top 20 per cent of earners pay up to 80 per cent of income tax.

“So I think that proposal to say to people - ‘you’ve worked hard on your life, you’ve bought your house... but now actually we want to take more off you when you die and you can’t give it to your family members’ - I think there’s an issue with that in terms of fairness.

“So I don’t detect an appetite for that specific measure.”

Mr Martin said he has not seen the report in full. “We have to look at the Commission of Taxation’s proposals in the entirety.

“But it will fall to Government to consider the report and to make decisions on it but I don’t see an appetite for that.”

Cost-of-living crisis

On the upcoming Budget, Mr Martin indicated that a focus will be helping families with children with the cost-of-living crisis.

He said energy price increases are impacting on people’s livelihoods, household disposable incomes and they threaten business and jobs.

“Once again Government will have to intervene to protect people first of all in terms of their basic incomes and also to make sure that we protect jobs through this particular crisis.”

He said the budget and an accompanying cost-of-living package will “bring in measures to alleviate the pressures on people insofar as we can”.

He said the three party leaders will meet later this week along with Minister for Finance Paschal Dohonoe and Minister for Public Expenditure Michael McGrath to go through the detail of packages “to help people get through this this very, very difficult and challenging crisis.”

He also said: “We’re looking at families and children in particular because obviously the costs will be higher there for families and obviously child-related costs.”

Mr Martin said the Government want to “allocate as much as we possibly can” for measures that kick-in before the end of 2022 as well as those in the wider budget like providing a “sustained improvement in childcare”.

He said the last budget saw substantial related to childcare workers and the next phase is to improve affordability for parents.

Mr Martin said an element of the cost-of-living package will help families with children “because the costs clearly with children are particularly high.”

Mr McGrath will address his Fianna Fáil colleagues on Budget preparations and the cost-of-living package during a session of the party’s think-in on Tuesday morning.

Housing

Meanwhile, the Taoiseach said that housing will continue to be his party’s priority.

“It [housing] is the big social issue of our day which will be a constant for quite some time. Not withstanding cost of living issues, not withstanding the war in Ukraine and other major issues that have happened.

“From a societal point of view, we know we have to keep the focus on housing, to get more houses built. This will need a society wide response, to work together and remove obstacles to development.

“We are seeing good progress overall in terms of the housing issue, but I am impatient for much much more.”

Housing Minister Darragh O’Brien confirmed that there has been significant progress made in terms of housing development so far in 2022. He said that the Government may even exceed this year’s targets.

“Housing is our number one priority, and it is good to see real momentum being built right across the country in delivering more social homes this year than we have done in any year of the state.

“We intend to achieve and potentially overachieve on our target this year of 24,600 new homes but we do need to do a lot more. There are challenges there, but we will overcome them.”