Fine Gael has called for reform of inheritance tax in the Budget, stating that the unprecendented rise in house prices in Dublin had resulted in "huge liabilities" which often cannot be paid by beneficiaries on low income.

Finance spokesman, Mr Michael Noonan, urged the Minister for Finance, Mr McCreevy, to change the tax which is charged when property is inherited after the death of its owner.

He said it was difficult to justify reductions in capital gains tax, introduced last year, while not changing inheritance tax. Mr Noonan's principal proposals include the exemption of the family home from the tax when the beneficiary lives in the home prior to the death of the disponer.

He is also proposing an increase in the exemption limit from £192,800 to £400,000 for family members inheriting the home.