FG’s response to tax commission report

A stress-test scenario

Sir, – Fintan O’Toole (“Fine Gael’s hysterical response to tax report is disgraceful and aims to stifle debate”, Opinion & Analysis, September 24th) uses the term “hysterical red-baiting” to describe my criticism of the Commission on Taxation and Welfare proposal to excessively reduce the tax-free threshold for capital acquisitions tax, which I said was bordering on Marxism (Letters, September 19th).

Fintan O’Toole probably doesn’t care whether ordinary middle-class families in areas like my own council area of Dún Laoghaire-Rathdown are faced with the practical consequences of a particularly high inheritance tax bill.

Yet it should be realised that the impact of reducing the Group A threshold for the tax from €335,000 to the Group B threshold of €32,500 (as the commission indicates should be moved towards over time) would adversely affect families from all socio-economic backgrounds from all over the country.

As a stress-test scenario, there could be an example of a cash-poor parent living with a sole son or daughter in a working-class area of Dublin owning a home worth €250,000. In the event of the parent’s death, the son or daughter would under the current threshold not have to pay any inheritance tax upon inheriting the family home. However, were the tax-free threshold to be adjusted to €32,500, that son or daughter would then face a vast tax bill of €71,775, which may effectively enforce sale of the home. There could be a great difficulty buying alternative accommodation with what would be left after deduction of tax, causing considerable upheaval in that person’s life.

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In such a case, the impact of moving the Group A threshold of capital acquisitions tax to the level of the Group B threshold would not just be regarded as severe, but as an instance of cruelty. – Yours, etc,

Cllr JOHN KENNEDY,

(Fine Gael),

Dún Laoghaire

Rathdown County

Council Offices,

Dún Laoghaire,

Co Dublin.