Dáil Éireann Debate, Tuesday - 9 November 2021
80. Deputy Éamon Ó Cuív asked the Minister for Finance the last time the threshold was increased of the gift a parent can give to a child for them not to be liable to have it assessed as part of their life gifts or inheritance from a parent; if he plans to increase the tax-free ceiling of the annual gift a parent can give a child from €3,000 in the forthcoming Finance Bill; and if he will make a statement on the matter. [54332/21]
View answerOne of the ways of increasing taxes is to leave tax thresholds the way they were. A threshold was introduced some time ago where people could give a gift to a child of €3,000 per annum and it was not assessable as part of the lifetime gift to that child in terms of inheritance or gift tax. My question is twofold. When was that threshold set and is it intended to increase the threshold?
I thank the Deputy for his two questions. That threshold was last changed in section 149 of the Finance Act of 2003. The Deputy will be aware of the operation of the credit. It was set in 2003 and I do not at this point have any plans to change it further, although I am aware of the role it plays in supporting families in the gifts they make from a parent to a child. However, with all of the other competing demands on the Exchequer at the moment, I was not in a position to change it in the recent budget.
As I pointed out, not increasing thresholds is actually increasing taxes. The Minister might tell me what is the increase in the consumer price index since 2003 and, in other words, in the real value of a gift. Would the Minister not agree that many parents give gifts to their children at a time of crisis for their children, at a time when there are childcare costs or child costs that were unforeseen, or at a time when they want to get their own property and furnish it, and so on? It seems it is an awful lot of bureaucracy if a parent gives €4,000 or €5,000 in that they then have to make a whole lot of tax returns for that extra €2,000 over a lifetime. I am not saying the person would ever reach the threshold and they might never actually have a tax liability because the inheritance tax threshold is €335,000, but it is all of this paperwork for very little merit. Would the Minister not consider increasing it to, say, a modest €5,000 given that would probably only give the real value of what was there in 2003?
The Deputy is correct that the non-indexation of different thresholds more often than not leads to an increase in tax revenue. As to what has been the change in inflation since the last change was made in 2003, the change in inflation in recent years alone would mean that the real impact of that threshold has now increased, given it has been left unchanged. I cannot at this point give the Deputy an indication as to what will be in next year's budget as we are still dealing with the Finance Bill for this year's budget. As I said, I was not in a position to make a change for this year but I accept that, because it has not been changed for some while, it is now covering off a larger share of any gifts that might be made at the moment from parents to children.
Does the Minister have any idea what an increase to €5,000 would cost the Exchequer?
Yes. An increase to €5,000 would have an approximate cost of €1.1 million.
This is just going to ordinary people who are giving a gift because many parents are now supporting children. Will the Minister give me an outline of what is the total tax take of the State? Thereafter, we will do a little sum in our head as to how much €1.1 million would be out of the €60 billion, €70 billion or €80 billion income and revenue the State is taking in.
The Minister might tell me what the tax take of the State is.
I gave a short answer to the Deputy's first question and I will give a short answer to the second one as well. It is a very low share of the total amount of tax that we take in. I accept that it has not been changed for some time and I thank the Deputy for bringing it to my attention.
