Dáil Éireann debate -
Tuesday, 1 Oct 2024

Vol. 1058 No. 6

Financial Resolution No. 3: Capital Acquisitions Tax

Minister for Agriculture, Food and the Marine (Deputy Charlie McConalogue)

I move:

(1) THAT for the purposes of the taxes charged by virtue of the Capital Acquisitions Tax Consolidation Act 2003 (No. 1 of 2003), that Act be amended in the definition of “group threshold” in paragraph 1 of Part 1 of Schedule 2 to that Act -

(a) in subparagraph (a), by the substitution of “€400,000” for “€335,000”,

(b) in subparagraph (b), by the substitution of “€40,000” for “€32,500”, and

(c) in subparagraph (c), by the substitution of “€20,000” for “€16,250”.

(2) THAT paragraph (1) of this Resolution shall apply in relation to a gift or inheritance taken on or after 2 October 2024.

(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 3 relates to capital acquisitions tax. The resolution provides for increases to the three tax-free thresholds, which are referred to as group thresholds. Where a person receives a gift or inheritance that exceeds the relevant group threshold, capital acquisition tax at a rate of 33% applies on the excess. The group A threshold principally relates to gifts and inheritances taken by children from their parents. The group B threshold principally covers gifts and inheritances received from other close relatives such as siblings, uncles, aunts and grandparents. The group C threshold deals with gifts and inheritances between all other persons.

This resolution provides for the following increases to the three group thresholds. The group A threshold will increase from €335,000 to €400,000, the group B threshold will increase from €32,500 to €40,000, and the group C threshold will increase from €16,250 to €20,000. The increased group thresholds will apply to gifts and inheritances taken on or after 2 October 2024. The increase in the amount of the group thresholds will cost an estimated €88 million for a year.

Deputy Paul Murphy

We had a budget that trumpeted the fact it is giving a so-called baby boost to new parents of children of €420. That is it. It will not go very far. Now, before midnight - in effect, from tomorrow morning - we have got a measure which will give a very substantial baby boost to the wealthiest 3% of households worth €21,450.

It is one of the great tricks of Fine Gael and Fianna Fáil to try to pretend that ordinary people are affected by inheritance tax. The vast majority of people are not, and will never be in their life. There is good research done by CSO called Intergenerational Transfer of Wealth 2020. What it found is that only 30% of households, or less than one in three, have received an inheritance at some stage in their life. Two thirds of households will never get a substantial inheritance at all. Of that one third, which will tend to be the richest one third, the average inheritance that they get is €80,000, coming nowhere close to the existing threshold.

Barra Roantree looked into the figures in more detail and discovered that about 3% of households would go over the old threshold. This is a substantial tax break for some of richest people in the country. That is the reality. It is not as pure as the richest 3% in the country because it is impacted by how many children there are and so on. That is true, but basically it is a tax break for the richest people in the country at a time when approximately 4,500 children are growing up in hotels and emergency accommodation and will potentially be impacted by that for their entire lives. At a time when one in ten families is driven to use food banks to feed their kids, and one in three families says it has to cut back on meals to ensure the kids can eat properly, we have a Government that wants to ensure the children of some of the richest families in the country can get a tax break of another €21,450. It is scandalous. It has not gotten enough attention. The truth and reality of what a class-based measure this is, and the small number of people it benefits, has not been the focus of enough discussion. It is really scandalous that the Government is making this decision at a time when so many people struggle to get by.

An Ceann Comhairle

Quite a number of Deputies are offering. Most of them are from the Rural Independent Group. They will be followed by Deputy Pringle. I will allow two minutes per Member, which will give us a chance to go back to the Minister.

Deputy Danny Healy-Rae

With the indulgence of the Ceann Comhairle, I want to register my opposition to the €1 tax on the cigarettes.

An Ceann Comhairle

No, we have dealt with that.

Deputy Danny Healy-Rae

I just want to say that it has to be remembered that 52% of mental health patients and people with mental health issues smoke.

I welcome this increase in the limits or caps for inheritance tax. Deputy Paul Murphy complains about farmers or others getting the benefit of this. Going back in time, if you were the son or daughter who inherited a farm, you were considered to be made for life. That is not the case anymore. The value of farms has gone up - there is no escaping that - which means that many young farmers starting out are landed with a massive bill to pay the capital gains tax, even at €400,000. You would not buy much of a farm now for €600,000 or €700,000. You would not live off that type of farm if you did not have something else. The threshold increase from €32,500 to €40,000 is completely inadequate. Again, it could be an uncle or someone. The increase from €16,250 to €20,000 is very low altogether given that the value of property is going up each day. Any fellow who takes over a farm has the ambition to hold onto it, try to make a living out of it and pass it on in better shape or as good as he got it.

Deputy Michael Collins

We are talking about the inheritance tax here. I welcome the move we have made, but I do not think we have gone far enough. It is not that I believe we should be throwing confetti up in the air in the budget and have everybody grabbing it. However, people paid for these properties. Most likely it is a farm or whatever. They are paying back the bank for this property. They are paying the property tax. They are paying for the repairs and the day-to-day running. Down on top of this, when they hand it over after all those years of payment, they are caught for inheritance tax if they are handing it on to their son or daughter or other family member. That is very unfair. I am surprised that people in this Chamber are objecting to that. That is a terrible infliction on people who have paid big money. As Deputy Danny Healy-Rae said, you are not going to buy a farm today for €100,000 or €200,000. You could pay up to €500,000 or €1 million for a farm. That is the bank being paid. When you have all those payments paid back after working mortally hard on your farm and your property, you are caught with a tax again at the end of it. It is a win-win situation for the State. It has made its money out of the property tax. It has made its money out of whatever other payments the farmer has had to make. The banks have made their money out of it. When the farmer comes to pass it on, they are going to bleed him dry. I believe that should be raised to €500,000. It is a hugely important issue. I know a decision has been made, but I do not think the Minister got the proper advice when he was making that decision. It is something we have looked into in recent times. I urge the Minister to make that change. I will not be supporting this unless the change is made.

Deputy Michael Healy-Rae

The Minister is going in the right direction, but he is not going far enough. If he studies the value of any type of property, be it a farm or any other asset, he will see that it is going up. At the end of the day, we have politicians in here who do not understand anything to do with farming, or with the value of land or any other type of property. They think that because a farm is worth a certain amount of money, that is something the farmer has. The Minister for agriculture understands this, but many Deputies in here have yet to grasp this nettle. I will explain easily what would happen if you were handed a farm tomorrow morning for nothing - if it was just given to you and you did not have to pay any capital gains or anything - and you were told to take that farm and make a living off it. The amount of land that is transferred in Ireland is minuscule. Why? Because it is transferred. People do not look on it as an asset or something that is worth €300,000, €400,000, €500,000 or €1 million. It makes no difference what it is worth because you are not bloody well selling it. What people are trying to do is just make a living and a profit out of it so they can call it a week's wages. People in here who are fully convinced talk about big farmers because they have a valuable farm. It does not matter if your farm is in the Black Valley or in County Kildare if all you are trying to do is make a living out of it. Again, people in here propagate this idea that whether it is houses or land or whatever it is, it is worth something. It is worth nothing unless you are selling it. If you are only holding it and trying to make a living out of it to pass it on to the next generation, people with farms adore their ground and all they want to do is improve it. I am saying the Government is not going far enough. If anybody looks at the way values have increased, they will see that this is not going far enough. When people inherit an asset, on the many occasions the first thing that happens is that they struggle to pay the tax.

Deputy Thomas Pringle

I fully oppose this measure because it is wrong. It targets and benefits the people who least need it. I wonder how many farmers in the country will be affected by this. I do not know. I would like to hear from the Minister how many he expects to benefit. I see this tax break benefiting wealthy business people across the whole country. That is who this is aimed at and who it is meant to benefit. It is interesting to look at the debate that has happened since this tax was mooted. The media and the politicians have all targeted the same people. They have said that people in households will be targeted or something at the end. That is not the case. I have even had people talking to me about this in my constituency office. These are people who will never have an asset worth this value, and they think they are going to be targeted. It is a big success for the Government in the way it has targeted this measure and made the public argument and discussion be about ordinary individuals and how they will be impacted. This is not aimed at them. This is aimed at wealthy business people so they can pass on assets at a reduced cost. That is what this measure is about.

Deputy Richard O'Donoghue

While I welcome this increase, it does not go far enough if you take into account the last three or four years of inflation and the cost of properties. Let us take as an example a cottage that somebody has left to a family member. Three or four years ago, before costs increased as a result of inflation, you could not give away a cottage for €25,000 or €30,000.

Now they are all making €100,000 or more and they are derelict. Did the Deputies on the other side of the House there ever hear of tradition? Did they ever hear that someone traditionally is a farmer and it is handed on? The next time they have a bite to eat and they look to see where it comes from, it might be from the same traditional farm they are actually cutting up today. It is not for sale because it is a tradition people are keeping on for generations and generations to keep them fed. That is what a tradition is. It is not wealthy people. It is a tradition and it is something that is steeped in my blood and that of a lot of other people here. Everyone looks at something like a farm or something that is worth something, as a sign people are well off. Easily known the Deputies were never brought up on a farm or they would know what well off is. You have to go out and do all the work for a pittance and get no reward. However, when something is on the shelf in a shop for them, they think it is great. They should look at a tradition of people who go out working 365 days of the year, whether they get paid for it or not, just to keep them in the place they are now.

Deputy Danny Healy-Rae

I honestly say they would not know the cow from the bull outside in the field.

An Ceann Comhairle

Let us not get into all of that.

Deputy Richard O'Donoghue

They think we all have sheep.

An Ceann Comhairle

Does anyone else want to comment before I go back to the Minister?

Deputy Danny Healy-Rae

About the cow and the bull?

Deputy Richard O'Donoghue

Or the traditions?

Deputy Danny Healy-Rae

They do not know a cow from a bull.

An Ceann Comhairle

Please, Deputies.

Deputy Charlie McConalogue

I thank the Deputies for the response and the contributions to the debate. This is a positive step forward and obviously will affect many ordinary, normal people. The threshold is now increasing for a child inheriting from a parent, from what would have €335,000 to €400,000. There are lots of very ordinary people, whether it be a farm, a home or a dwelling house, where they would be inheriting that from a parent, and, indeed, where a parent, having worked very hard all of his or her life would like to help provide for a family coming after them and be able to hand over the family home, for example, or indeed in some cases, a farm as well. They want-----

Deputy Paul Murphy

A farm is written down by 90%. With agricultural relief you can get up to €3.35 million.

(Interruptions)

An Ceann Comhairle

Will the Deputies let the Minister answer please?

Deputy Charlie McConalogue

-----to be able to do so as well without passing on a burden of tax for the child who is coming after them. Indeed, in several instances, where someone may be inheriting a family home, for example, they may not be in a strong position to be able to pay the type of tax which would be befalling them afterwards and may not be in the position to continue living there either. That can happen many normal people despite what some Deputies might say here today.

This is a positive step forward. It rewards hard work. It rewards people who are trying to do the very best they can and then pass the fruits of their endeavours on to those who are coming after them. This is a proportionate, balanced and welcome measure in today's budget and I recommend it to the House for endorsement.

Question put: "That Financial Resolution No. 3 be agreed to."

The Dáil divided: Tá, 89; Níl, 53; Staon, 0.

Tá

• Berry, Cathal.
• Brophy, Colm.
• Browne, James.
• Bruton, Richard.
• Burke, Colm.
• Burke, Peter.
• Butler, Mary.
• Byrne, Thomas.
• Cahill, Jackie.
• Calleary, Dara.
• Canney, Seán.
• Cannon, Ciarán.
• Carroll MacNeill, Jennifer.
• Collins, Michael.
• Collins, Niall.
• Costello, Patrick.
• Coveney, Simon.
• Creed, Michael.
• Crowe, Cathal.
• Devlin, Cormac.
• Dillon, Alan.
• Donnelly, Stephen.
• Duffy, Francis Noel.
• Durkan, Bernard J.
• English, Damien.
• Farrell, Alan.
• Feighan, Frankie.
• Fitzmaurice, Michael.
• Fitzpatrick, Peter.
• Flaherty, Joe.
• Flanagan, Charles.
• Fleming, Sean.
• Foley, Norma.
• Griffin, Brendan.
• Harkin, Marian.
• Haughey, Seán.
• Healy-Rae, Danny.
• Healy-Rae, Michael.
• Heydon, Martin.
• Higgins, Emer.
• Hourigan, Neasa.
• Humphreys, Heather.
• Kehoe, Paul.
• Lahart, John.
• Lawless, James.
• Leddin, Brian.
• MacSharry, Marc.
• Madigan, Josepha.
• Martin, Catherine.
• Martin, Micheál.
• Matthews, Steven.
• McAuliffe, Paul.
• McConalogue, Charlie.
• McEntee, Helen.
• McGrath, Mattie.
• McHugh, Joe.
• Moynihan, Aindrias.
• Moynihan, Michael.
• Murnane O'Connor, Jennifer.
• Murphy, Verona.
• Naughten, Denis.
• Naughton, Hildegarde.
• Noonan, Malcolm.
• O'Brien, Darragh.
• O'Brien, Joe.
• O'Callaghan, Jim.
• O'Connor, James.
• O'Dea, Willie.
• O'Donnell, Kieran.
• O'Donoghue, Richard.
• O'Donovan, Patrick.
• O'Dowd, Fergus.
• O'Gorman, Roderic.
• O'Sullivan, Christopher.
• O'Sullivan, Pádraig.
• Ó Cathasaigh, Marc.
• Ó Cuív, Éamon.
• Phelan, John Paul.
• Rabbitte, Anne.
• Richmond, Neale.
• Ring, Michael.
• Ryan, Eamon.
• Shanahan, Matt.
• Smith, Brendan.
• Smyth, Niamh.
• Smyth, Ossian.
• Stanton, David.
• Troy, Robert.
• Varadkar, Leo.

Níl

• Andrews, Chris.
• Bacik, Ivana.
• Barry, Mick.
• Boyd Barrett, Richard.
• Brady, John.
• Browne, Martin.
• Buckley, Pat.
• Cairns, Holly.
• Carthy, Matt.
• Clarke, Sorca.
• Collins, Joan.
• Cronin, Réada.
• Crowe, Seán.
• Cullinane, David.
• Daly, Pa.
• Donnelly, Paul.
• Ellis, Dessie.
• Farrell, Mairéad.
• Gannon, Gary.
• Gould, Thomas.
• Guirke, Johnny.
• Howlin, Brendan.
• Kelly, Alan.
• Kenny, Gino.
• Kenny, Martin.
• Kerrane, Claire.
• Mac Lochlainn, Pádraig.
• McDonald, Mary Lou.
• Mitchell, Denise.
• Munster, Imelda.
• Murphy, Catherine.
• Murphy, Paul.
• Mythen, Johnny.
• Nash, Ged.
• Nolan, Carol.
• O'Callaghan, Cian.
• O'Reilly, Louise.
• O'Rourke, Darren.
• Ó Broin, Eoin.
• Ó Murchú, Ruairí.
• Ó Snodaigh, Aengus.
• Pringle, Thomas.
• Quinlivan, Maurice.
• Ryan, Patricia.
• Sherlock, Sean.
• Shortall, Róisín.
• Smith, Bríd.
• Smith, Duncan.
• Stanley, Brian.
• Tully, Pauline.
• Ward, Mark.
• Whitmore, Jennifer.
• Wynne, Violet-Anne.

Staon

Tellers: Tá, Deputies Hildegarde Naughton and Cormac Devlin; Níl, Deputies Richard Boyd Barrett and Pádraig Mac Lochlainn.

Question declared carried.