Fianna Fáil and Fine Gael, emboldened by recent election results, are confident enough to return to policies that feather the nests of the ruling class. They have created the narrative facilitated as always by their lackeys in the media that inheritance tax is “too punitive and unfair and needs to be reduced”. They would like to see the thresholds increase to at least €500,000 and to €700,000 if they can get away with it. They would also like to slash the rate of this tax.
As it stands in Ireland a child, foster child, or grandchild (if a parent has died when they are under 18) can receive up to €335,000 tax free in their lifetime. Brothers or sisters, parents, grandparents grandchildren, nieces or nephews can receive up to €35,500 without paying tax. A gift or inheritance received from anyone not listed above is exempt from tax up to €16,250. Inheritance tax is paid at a rate of 33% in all other situations. €335,000 vastly exceeds what the majority of people in Ireland will inherit over their lifetime.
The majority of inheritance received by ordinary working people is a few hundred quid, a watch or some other memento. For others it’s a share of the family home after the passing of their parents. According to the Central Statistics Office, the average cost of homes across the country is €335,000, the exact amount exempt from inheritance tax.
This exposes the lie that this tax is punitive. The average number of children per family today in Ireland is 1.34. and home ownership the main form of wealth accumulation by ordinary working people is becoming a thing of the past. Private rented accommodation is the main form of tenure in our cities and towns, as per the 2016 census. There will be no inheritance for ordinary working families from now on.
Most of inheritance being collected today is by the children from families of the 1970s when the average was four children per family. In other words the exemption split four ways would be in excess of €1.3 million value on assets bequeathed. This is well above the value of an ordinary family home.
Inheritance tax is a tax on wealth which at the very least should be maintained and increased. Much of this wealth has been accumulated through the exploitation of ordinary working people by landlords charging excessive rents and employers paying poverty wages. The exemptions in place at the minute are well above and beyond what the vast majority of people receive in inheritances over their lifetime. With home ownership rapidly becoming a thing of the past, inheritance tax is something paid by only the wealthiest in society.
When citizens finally pay off mortgages on their homes they are close to retirement age with many relying entirely on the state pension for subsistence. In the past the state sold off much of the public housing stock at reduced prices to tenants which has contributed to a drastic shortage in public housing stock and the crisis in housing. In order to replenish the public housing stock, the state needs to reverse this policy.
The state should purchase privately owned houses from citizens at a percentage of their market value and allow the Citizens to live on in these homes rent-free until their passing. This will add to the public housing stock and end pension poverty for many. The money obtained will be spent in the local economy. In reality when family members receive inheritance from their parent these “children” are usually in or nearing retirement age themselves. Gifts of up to €3,000 a year to your children are exempt from tax under the “punative tax rules”.
With the state buy back scheme, instead of receiving a share of the value of the family home on the passing of parents, parents could pass on some of this wealth to the children when they are still alive and see them enjoy it. The percentage value of the home being sold to the state would be age-dependent: the younger the person the lower the percentage, as they will live in it for longer.
Inheritance tax accounts for just one percent of the net tax in Ireland at the moment. This despite €153 billion in bank deposits in Ireland. These savings are the tip of the iceberg in accumulated wealth and only savings that people admit to. They don’t include investments, shares or offshore accounts, nor holiday homes, jewellery and all the luxury goods that the ruling class lavish on themselves, paid for by the graft of ordinary people during a lifetime toil, and write off against company taxes.
Far from cutting inheritance tax rates these hoarders of wealth should pay their debt to the society when they leave this world.
