Dáil Éireann Debate, Thursday - 5 October 2023
96. Deputy Ged Nash asked the Minister for Finance to report on any work his Department has undertaken to advance the recommendations contained in the Commission on Taxation and Welfare's report on capital taxes; if he agrees that the balance between income and capital taxes needs to change; and if he will make a statement on the matter. [43053/23]
View answerAs the Deputy is aware, the report of the Commission on Taxation and Welfare (COTW) examined Ireland’s capital taxes policy in detail. The Commission placed emphasis on the importance of broadening the tax base and in particular recommended that the share of taxes from capital and wealth should be increased. This is in the context of 2.5% of tax receipts currently coming from capital taxes. The COTW made the case for significant changes to current capital taxes policy. One theme which emerged from the COTW report was that the various reliefs provided for in respect of both Capital Acquisitions Tax (CAT) and Capital Gains Tax (CGT) interact in a way which provide valuable relief to those who qualify with a consequence that the amount of tax collected on the transfer of assets is diminished.
For CGT, the Commission made recommendations related to the treatment of assets on a death, restriction on principal private residence relief and lifetime limits on disposals to children who qualify for retirement relief. For Capital Acquisitions Tax, the commission made recommendations related to group thresholds, gifts and inheritances generally, the treatment of foster children and reductions in the availability of agricultural and business relief.
My Department will, over the medium to long term consider the wider range of issues highlighted by the COTW. In particular, the recommendation’s regarding specific reliefs will be considered as each of these reliefs falls due for their periodic review.
Ireland has one of the most progressive systems of taxes and social transfers of any EU or OECD country, which contributes to the redistribution of income and to the reduction of income inequality.
Capital taxes play an important role in ensuring that taxation is not focused solely on income and that those who benefit from gains in the value of their assets or gifts of assets are included within the tax net on an equitable basis.
In conclusion, I can assure you that all taxes and potential taxation options are kept under constant consideration and it remains a priority of mine to ensure that Ireland maintains its progressive taxation system.
