REFORM OF INHERITANCE tax is on the table in this year’s Budget, but Tánaiste Micheál Martin has ruled out abolishing it entirely on family homes similar to countries like Canada and Australia.
Speaking to reporters in Addis Ababa this afternoon the Tánaiste and leader of Fianna Fáil said it is his view that inheritance tax as it stands is “punitive” on the average family.
His comments come after Taoiseach Simon Harris said earlier this week that reforms to the tax “deserve to be considered” in the run up to October’s budget.
Under the current rules, children are able to inherit €335,000 from their parents before they have to pay tax at 33%.
However, those in Fine Gael, such as Minister of State for financial services Neale Richmond, have argued for reforms and have highlighted that 13 years ago, a person could inherit €542,544 or be gifted that amount before paying tax at 22%.
When asked if government would consider abolishing inheritance tax on the family homes, Martin said today:
“No it won’t be abolished, the Minister of Finance may look at aspects of it. But we’ve got to be realistic.”
The Minister for Finance Jack Chambers will announce the details of the entire tax package in the Budget “but the bottom line is we have €1.4 billion put aside for tax measures”, said the Tánaiste.
He said the overwhelming bulk of that will go towards reduction in personal taxation, income tax, and “maybe USC, that’s to be determined”.
“Other areas will be looked at including inheritance tax but it won’t be abolished,” said the Tánaiste, who added that the focus needs to be kept on the fact there is a €1.4 billion pot.
“How much it takes to keep pace with wage growth. That’s the key priority. And there’s not a whole lot left is what I’m saying after you do that to do other things.
“But it is on the table in terms of potential reforms. And I actually empathise with those who feel it’s too punitive on the average family home. I do accept that principle.
“But in one Budget, the minister may have some proposals to bring to us in respect of that but his room for maneuver is limited,” he said.
Martin refused to be drawn on the details or whether there would be an increase to the threshold.
The Taoiseach said earlier this week that there are issues around “unfairnesses” and “anomalies” within the inheritance tax system.
In response, Sinn Féin’s Pearse Doherty told The Journal yesterday that he wasn’t surprised Harris is looking to “favour those who are coming into large wealth” by floating the idea of inheritance tax changes in this year’s budget.
Sinn Féin, in its last alternative budget, proposed to increase the rate of inheritance tax by 3%, from 33% to 36%.
Doherty confirmed that increasing the inheritance tax rate is still the party’s policy.
With reporting by Christina Finn
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