Michael Ferris
Ceist:27 Mr. Ferris asked the Minister for Finance the proposals, if any, he has in relation to capital acquisitions tax. [5579/98]
Other Questions. - Capital Acquisitions Tax.
I announced in the budget an extension of the existing elderly siblings capital acquisitions tax relief. The value of a residence or part of a residence inherited from a sibling residing in the same residence can now be reduced by 80 per cent or £150,000, whichever is the lesser, as opposed to 60 per cent or £80,000, whichever was the lesser. I also announced a new inheritance tax relief for those inheriting their principal private residence from a close relative. This new relief also allows the value of a residence or part of a residence inherited to be reduced by 80 per cent or £150,000 for capital acquisitions tax purposes. These measures were taken to alleviate the position of elderly brothers and sisters and other close relatives who may face a large tax charge on inheriting their family home.
In addition to the above reliefs the transfer of agricultural and business assets by gift or inheritance can avail of up to 90 per cent capital acquisitions tax relief, subject to certain conditions being met. These reliefs, which were considerably extended in the three preceding budgets, substantially reduce the amount of inheritance tax payable on such transfers. Given the existence of these reliefs in the current capital acquisitions tax code, I have no plans, at present, to make further changes in this regard.
I tabled this question to provide an early warning of any dramatic moves the Minister may take regarding capital acquisitions tax. Because of his response, I take it he has no such intentions. Does he intend to change the general thresholds relating to capital acquisitions tax, either with regard to inheritance or gifts? Will he explain why capital gains is now taxable at 20 per cent whereas the marginal rate of capital acquisitions tax is 40 per cent?
I have no plans at present to alter the thresholds and nothing to that effect has been contemplated in the Finance Bill. I do not know what I will do in future Finance Bills. The former Minister, Deputy Quinn, made significant changes to the capital acquisitions tax in previous budgets with regard to business relief, which also applies to farmers. These have allowed for businesses to be transferred without a big imposition of capital acquisitions tax, which was widely welcomed by the business and farming community. I have no plans at present to increase any of those thresholds.
The Minister gave as his primary reason for changing the rate of capital gains tax from 40 per cent to 20 per cent his wish to free up assets. What, in principle, is the difference between capital acquisitions tax and gifts which are now taxed at a marginal rate of 40 per cent on capital gains? While I do not argue for this, why does he not reduce the rate of capital acquisitions tax to 20 per cent also?
If the Deputy is proposing this as Labour Party policy I am willing to consider it.
I am trying to ascertain the Minister's position on the matter.
The Deputy is not making a proposal in that regard, nor am I.
Will the Minister provide information on the number of cases to which the elderly siblings relief will apply? It is one of a number of matters on which I made representations to him before the budget.
The Deputy made this proposition which I took up in the budget. The Revenue Commissioners estimate that approximately 250 cases per annum qualify for elderly siblings relief. They tentatively estimate that up to 50 cases per annum will qualify for the new close relatives principal private residents relief which I introduced in the budget.
Written Answers follow Adjournment Debate.