I thank the Minister of State for taking this debate. Since 2009, the applicable rate of taxation on inheritance has increased from 20% to 33%, while the threshold above which this rate has applied has dropped from €542,544 to €225,000. Although reductions in the threshold were understandable in the climate of falling asset prices and falling property prices which followed the financial crash, the situation is now radically different. The threshold above which bereaved children are forced to pay tax on their inheritance is at its lowest level in Ireland since 1995. Many family homes, particularly in Dublin, have risen substantially in value over recent years. Irish property prices are rising at 15 times the average European rate. A consequence of these rises is that a family now faces the prospect of liquidating the family home on the death of an elderly parent to meet the inheritance tax liability owed to the Revenue Commissioners. Had Fianna Fáil not abolished the previous practice of index-linking the inheritance tax threshold to inflation, the effect of rising property prices might have been mitigated to some extent.
To put the Irish situation in context, a recent study undertaken by the Tax Foundation in the US found that Ireland had the seventh highest rate of inheritance tax in the OECD. The global average is estimated at just 7.7%, in contrast with our 33%, while many countries, including developed, modern, Western economies such as New Zealand and Australia, have no inheritance tax whatsoever. It is important to dispel the notion pedalled by the Government that inheritance tax affects only the super-wealthy. It is untrue. A threshold as low as €225,000 means the majority of properties in the greater Dublin region face a significant inheritance tax liability upon the gift of that property by a deceased family member. Since 2010, the number of cases in which inheritance tax is applied has increased by over one third.
Inheritance tax penalises those who have prudently saved their already-taxed income over their working lifetimes. It is a double taxation. It is worth bearing in mind the following statement by Deputy Alan Shatter in 2005:
Inheritance tax achieves no beneficial social objective. Essentially, it is a mechanism to facilitate the State to rob the graves of the dead and cruelly deprive bereaved relations of assets to which they are entitled.
While I acknowledge that the fiscal situation in which the State finds itself necessitates some form of taxation on large inheritances, our punitive regime serves to widen further the growing divide between urban and rural taxpayers. Both the inheritance tax and the deeply unfair property tax are driven primarily by the value of residential property, which is growing much more quickly in cities than in rural Ireland. The Government has done nothing to address the unfair tax bill faced by middle-income families in Ireland's cities. To make matters worse, the people who will suffer most from the harshness of our inheritance tax are a generation of people who have already suffered through the most austere and substantial economic cutbacks brought about by the collapse of the Irish economy.
The Opposition parties have abjectly failed to recognise or understand the drastic scale of the inheritance tax issue. Fianna Fáil has taken no meaningful stance on inheritance tax and refused to support my proposed amendment to the Finance Bill last autumn. Sinn Féin’s proposal to increase the rate of inheritance tax from 33% to an extraordinary 40% is further evidence of its ideological agenda to disincentivise enterprise and work and punish those who want to contribute to Ireland's economic prosperity. My party, Renua, is the only party that has consistently fought to alleviate the inheritance tax burden for working families.