With the full support of a packed meeting I organised in Mount Merrion Community Centre on August 25 2015, I actively campaigned in favour of my proposals for a reform of this punitive tax:
1) Increase the threshold from the current €225,000 to €500,000 which was the 2008 level; 2) Cut the tax from 33% to 20% – the 2008 rate; 3) Give a further 12 months to pay the tax instead of having to raise the money to pay the tax by October in the year of inheritance.
Over 1,000 people, mainly from south Dublin, signed a petition to the Minister for Finance in favour of my proposals and I presented the petition at the Department of Finance on September 30 2015.
In his Budget statement in October, the Minister for Finance, Michael Noonan TD, did recognise that there was an issue with inheritance tax but his concession of an increase in the threshold from €225,000 to €280,000 can only be described as miserly and minimal.
Imagine that with this so called concession, the Department of Finance expect to collect even more next year from inheritance tax – a massive €375m, up €5m on the expected receipts this year.
The underlying issue is that the inheritance tax is not a serious issue for residents in most of the country where house prices are still low. House prices in South County Dublin now average at €520,000 compared with €225,000 in Cork city, €223,000 in Galway city and €144,000 in Limerick city (daft.ie Q3 report). No wonder the Inheritance tax is not an issue in these other cities but is a real live issue for families in South County Dublin!
In the last four years the number of people liable for inheritance tax has rocketed by 34%. The dramatic reduction in the thresholds has particularly penalised ordinary families in Dublin who are being hit with huge tax bills when they inherit even a modest family home. For example, an only child who this year inherits their parents’ home worth €350,000 would be forced to pay a hefty €23,100 inheritance tax. If they had inherited a home of the same value in 2011, they would have paid just €4,479 in tax. Their tax liability has jumped nine fold.
There are two reasons for this massive increase in the tax liability. Inheritance tax thresholds were originally reduced substantially to reflect the fall in property prices but they have not been adjusted back up since property prices in Dublin began to rise again. In fact, thresholds are now at the same level as they were in 1995. The rate at which the tax is applied has also increased massively from 25% in 2011 to 33% now.
We are now in a situation where people who are far from wealthy are being forced to sell the home they inherit in order to meet their tax bill. It is deeply unfair on Dublin families in particular, at a time when a modest family home in most areas of the city now exceeds the low threshold of €280,000.
It is the wish of every parent to be able to provide security for their family. In their later years, a parent will naturally want to be able to pass on the fruits of their lifetime’s work to their children and grandchildren. Whether this is in the form of the family home or savings, it is very important to parents that they are able to help secure the future financial wellbeing of their family.
I am determined to continue to use every channel open to me to sustain the campaign for a more equitable and less punitive inheritance tax regime.