Grieving families 'should get relief from inheritance taxes' - says draft report
Grieving families should get relief from dreaded death taxes and the inheritance threshold should be increased to €500,000, according to a draft report by a powerful Dáil committee.
The Oireachtas Budget Oversight Committee has recommended increasing the inheritance tax threshold due to "significant and consistent" increases in house prices.
The report also suggests an alternative to increasing the threshold would be to extend the dwelling house exemption to family members who are no longer living in the inherited home.
Increasing the inheritance threshold for family members from €310,000 to €500,000 would cost around €134m a year. This year, inheritance tax is expected to raise €472m.
It is understood Budget Oversight Committee chair and Fine Gael TD Colm Brophy was central to proposing the inheritance tax changes.
The draft report also sets out four different proposals for the 9pc Vat rate ahead of October's Budget. These include increasing the rate back to 13.5pc for all services, which would raise €500m a year.
The committee, which will send its final recommendations to Finance Minister Paschal Donohoe, also suggests the 9pc could be gradually increased to 13.5pc over time.
A third option would keep the 9pc rate for selected services such as museums, hairdressers and restaurants while hotels would be charged the 13.5pc.
The final proposal suggests keeping the current VAT system in place.
"In the long run, it is not possible to conclusively separate the impact of the rate reduction from broader improvements in the economic environment," the draft states.
"The review stated that the 9pc rate was regressive, as the services to which it applies are discretionary in nature and are disproportionately purchased by higher-income groups."
The report, which will be discussed by the committee in more detail in the coming weeks, also suggests increasing gambling tax by 1pc to 2pc. This would raise €103m in a full year.
The report also suggests equalising the tax rates on diesel and petrol in the Budget. It recommends phased introduction of carbon tax increases to give people time to switch to green energy vehicles.
It also suggests changes to benefit-in-kind charges on cars to make the tax more environmentally friendly. The current scheme incentivised employees to increase kilometres driven to reduce tax liabilities, the report said.
Meanwhile, an ESRI analysis has found that budget changes over the past decade have had a greater impact on reducing the incomes of couples with children compared to those with none.
Based on the assumption they pool their income, couples with children have fared relatively worse over the past 10 years than couples without children - changes to child benefit and other welfare payments were responsible for this difference, according to the yet-to-be-published research.
However, among couples with children, women fared relatively worse than men, the research found.
The differences between men and women were more pronounced among those in lower income brackets.
In the same period, it was lone parents who suffered to a greater extent than single people without children.