Sir, – Alan Shatter (Letters, July 25th) refers to one of the most curious anomalies affecting inheritance tax: the treatment of farms and other businesses. A child inheriting a farm or other business will pay no tax on the first €3,350,000 and a rate of 3.3 per cent on any value in excess of that amount. Comparing this to the €335,000 exemption enjoyed by the rest of us, and the 33 per cent rate applying to our balance, makes it very hard to see this as a tax on “wealth” rather than a tax on the savings of PAYE workers who have behaved responsibly and have had a bit of luck, which most of us who bought a home have had.
I agree with Mr Shatter that this tax could be abolished – it generates only 1 per cent of the State’s tax revenue. If not abolished it would be difficult to reform. We would have to consider what we actually want to achieve in taxing gifts and inheritances. My own preference would be to use it to prevent the inheritance of power and to leave alone parents who wish to pass on to their children part of the modest degree of independence they have achieved for themselves. – Yours, etc,
WILLIAM HUNT,
Ranelagh,
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Dublin 6.
Sir, – The oft-repeated, heart-rending plea that this tax penalises those who have worked hard to pass the family home on to their children invites two retorts. In the first place, it is not obvious to me that children are owed anything because their parents worked hard (the hard-working parents don’t benefit because they have already passed away). Then, most of the children in question are already adults who don’t want to live in the parental home. Most of the children who inherit the parental home merely want to sell it (hence the prevalence of executor sales). The inheritance is thus effectively in cash.
Second, there is the “double tax” point where Alan Shatter really goes to town, even claiming an analogy between this tax and the work of the Criminal Assets Bureau. “Double tax” is one of the least meaningful expressions widely used. Is PRSI double tax because it applies (more or less) to the same base as income tax? Or is VAT double tax because it applies to consumption which is financed from taxed income? Of course not or, if it is, so what? The only useful meaning of this expression is to refer to more than one jurisdiction applying tax to a given base (two countries, or the federal and state authorities in a single country).
Finally, Mr Shatter claims that inheritance tax has been abolished “in a variety of states throughout the world”. In the EU and associated regions, there are indeed a handful of countries with no inheritance tax, but almost every one of them has an annual property tax which is serious compared with our derisory efforts in this regard. The only European country I could find with neither inheritance nor annual property taxes is Liechtenstein.
Inheritance tax is just about the only measure we have to counteract the undesirable process of inequalities of wealth being passed from generation to generation. Let us use it effectively. – Yours, etc,
JOHN BRISTOW,
Killiney,
Co Dublin.
Sir, – We pay tax on already-taxed assets all the time.
I own stocks in companies that make a profit – that is taxed. They give me some of the remaining profits in the form of dividends. I then pay tax on that money which had already been taxed.
A client of mine earns a salary, which is taxed. With their remaining money, they pay me to do a job for them. I then pay tax on that money which had already been taxed.
My parents had a fully tax-compliant estate. They passed away and left it to me. I then paid tax on that money which had already been taxed.
Yet in none of these examples does double taxation occur, as no individual pays tax twice on the same income. Alan Shatter states that “inheritance tax is simply unfair double taxation” when it is simply fair taxation. – Yours, etc,
CONOR McDONNELL,
Dundrum,
Dublin 16.