Dublin: The Inheritance Tax Reform Campaign (ITRC) has strongly criticised Ireland’s inheritance tax, describing it as a form of ‘robbery’ tantamount to stealing from the deceased. Unlike countries such as India, where inherited family property transferred to children is tax-exempt, Ireland imposes significant taxes on such transfers.
Under current Irish law, a person can inherit up to €335,000 tax-free. In contrast, inheritances from uncles, aunts, or siblings are only tax-free up to €32,500. Any amount above these thresholds is subject to a 33% tax. While spouses are exempt from paying inheritance tax if their partner passes away, critics argue that the tax disproportionately affects children, grandchildren, and other close relatives. For instance, a house valued at €500,000 passed on to one’s children would incur a tax of 33% on the amount exceeding €335,000, resulting in a tax bill of €54,450.
Historical Context and Current Criticism
Critics highlight that the current tax level is higher than during the Celtic Tiger era. In 2006, 2007, and 2008, children could inherit property worth up to €542,000 from their parents tax-free, and the tax on amounts above this threshold was 20%. However, during the financial crisis, the tax was increased, and it has not been reduced since.
While some argue that inheritance tax mainly affects the wealthy and that the revenue supports public services such as health and education, others contend that it is unfair. Alan Shatter, chairperson of the ITRC, argues that the tax is an unjust invasion of family rights and privacy. He points out that countries like Australia and New Zealand do not levy inheritance tax, viewing it as a usurpation of family rights.
Shatter, a former Justice Minister and TD, claims that the government’s approach to directly confiscating inherited property is arbitrary and outdated, causing significant hardship for many families. He argues that young people, already struggling to buy homes while living in rental accommodations, are further disadvantaged by this tax, which prevents them from using traditionally acquired property to secure housing.
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