Sunday 23 October 2016

Kenny will slash Middle Ireland's inheritance tax

Noonan hits at 'critics' and says recovery due to FG policies

Philip Ryan and Ronald Quinlan

Published 24/01/2016 | 02:30

Enda Kenny's promise is made to appeal to 'Middle Ireland' voters Photo: Sam Boal / 
Enda Kenny's promise is made to appeal to 'Middle Ireland' voters Photo: Sam Boal / 

Taoiseach Enda Kenny will promise to effectively abolish inheritance tax for the vast majority of families as part of Fine Gael's bid to woo 'Middle Ireland' voters ahead of the General Election, the Sunday Independent can reveal.

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Mr Kenny's plan to drastically increase the inheritance tax threshold from €280,000 to €500,000 over the lifetime of the next government will be set out in Fine Gael's election manifesto.

The move, which will see inheritance tax returned to its 2009 level, will mean that 90pc of families will not be burdened with massive tax bills when they inherit family homes, according to party sources.

The significant tax reform is one of a suite of measures which will be billed by Fine Gael as "rewards for the hard work and efforts of people in Middle Ireland".

Should Fine Gael be returned to power and raise the threshold to €500,000, it would have a dramatic impact on the finances of the middle or so-called 'coping classes'.

An analysis by the Sunday Independent of property values across Dublin, reveals that the vast majority of the capital's stock of three bed semi-detached houses would no longer be liable for Capital Acquisitions Tax.

Fine Gael this weekend also moved to claim full credit for the economic recovery to date and outlined a plan to "keep the recovery going" after the General Election, which Mr Kenny said would be called in a matter of weeks.

Read more: Kenny: election will be referendum on recovery

At the party's ard fheis, Finance Minister Michael Noonan rounded on "critics" who claim the recovery is due to external factors and said the Government's policies were the reason the country is "doing well".

The Fine Gael strategy to claim almost all credit for the recovery to date is intended to counter a view that low interest rates, low inflation, falling energy prices and quantitative easing led to the recovery.

Fine Gael ministers yesterday repeatedly stated that the recovery "didn't happen by accident" but was down to decisions taken by the Coalition.

The inheritance tax threshold was reduced incrementally from €524,544 in 2009 to €225,000 in 2012 before being restored to €280,000 in last October's budget.

The increase in the threshold was expected to cost the exchequer €28m in 2015 and €33m in 2016. While inheritance tax was applied to 8,500 cases in 2010, the final two reductions in the threshold saw that figure increase to 11,370 by 2014.

In his keynote address, Mr Kenny specifically mentioned "middle-income families" when announcing his promise to slash the marginal tax rate to 40pc by abolishing the Universal Social Charge.

"If we are re-elected by the people, just as we said goodbye to the Troika, we will say goodbye to the USC," he said.

As Fianna Fail yesterday accused Fine Gael of "limitless arrogance," Mr Kenny said the recovery was not a "political prize or a global headline" but something to be "felt and lived" by everybody "because it's your recovery."

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Last weekend, the Fianna Fail leader, Micheal Martin said: "This Government didn't deliver recovery."

The initial stage of the election campaign is now expected to be dominated by claim and counter-claim over credit for the recovery to date.

The clearly irked Finance Minister, Mr Noonan, hit out at "critics" who "claim that the recovery is entirely due to favourable external circumstances."

Several leading economists have said that low interest rates, low inflation, falling oil prices and quantitative easing in Europe have played a significant role in the recovery and have described the Government as "lucky".

In its most recent assessment report, the Irish Fiscal Advisory Council also referred to a "confluence of favourable external developments" in "driving rapid growth in the Irish economy."

It warned that "numerous fragilities in the external environment and domestic risks mean that these growth prospects are far from assured."

Although he did not refer to the Fiscal Council or any economist, Mr Noonan yesterday led the Fine Gael charge to take most of the credit for the recovery ahead of the election.

To critics who said the recovery was due to external factors, Mr Noonan said: "If this is the case, why isn't there a similar recovery in Greece, which experienced the same favourable external circumstances?

Why isn't there a similar recovery in France, which has experienced the same favourable external circumstances?

"The answer to these questions is very simple. The Irish recovery is due principally to the policies pursued by the Irish Government."

Sunday Independent

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