INHERITANCE TAX THRESHOLDS are “unfair”, according to Tánaiste Simon Harris, who said he would like to see thresholds increase over the lifetime of the government. 

Budget 2026 was high on the agenda of today’s Fine Gael party think-in in Mullingar, where housing, VAT for hospitality, the carers’ allowance and childcare were all discussed. 

Asked if he wants to see the threshold increased from €400,000 to €500,000 before a child would have to pay the 33% Capital Acquisition Tax (also known as inheritance tax), Harris said “clear commitments” have been made in relation to progressive changes to that form of tax.

The Journal reported last month that changes to the inheritance tax system in the next Budget is something a number of both Fianna Fáil and Fine Gael backbenchers are pushing for.

The Tánaiste said he would not be “prescriptive on what moves” the government might take on the matter, but added: 

“I do think the inheritance tax thresholds are unfair. They are punitive, particularly in certain parts of the country, and Fine Gael would like to see those thresholds increase over the lifetime of the government, whether we make a move on that in this budget remains to be seen.”

In his opening remarks to his party colleagues today, Harris said this year’s budget needs to be seen as “installment one of five”.

“What we need to do is be able to set out a direction of travel that we want to make on a whole variety of areas, including tax, but the pace at which we move is obviously interdependent. If you decide to do more on one thing this year, you need to do a little bit less on the other,” he added. 

Childcare action plan to be published

One such area the government plans to set out its timelines is childcare.

During the election campaign, a number of parties, including Fine Gael, promised to cut the costs to families and introduce a €200 cap for parents. 

Harris said there are 21 commitments in the Programme for Government in relation to childcare, including issues around access, places, and reducing the cost.

“In the coming weeks, I expect to see an Action Plan published that will outline how we intend to knit all of those commitments together,” he told his parliamentary party today. 

“And I believe Budget 2026 has to move forward in terms of advancing those commitments. Getting childcare right is important. It’s important for families, it’s important for society, and it’s important for our economy,” he added. 

Harris reiterated that there won’t be once-off measures in this year’s budget, stating that the government wants to move towards more permanent cost reducing measures. 

‘No intention’ of rolling out VAT reduction for hotels

On the issue of a VAT reduction from 13.5% to 9% for the hospitality sector, Harris said “there’s a lot of different figures floating around here, some of which I reject” around how much it will all cost.

The cost for reducing the VAT rate for restaurants and cafes would be between between €500 and €600 million for a full year, he clarified,

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“That’s just if you do it for food, and we’ve no intention to do it for hotel rooms,” he added.

If the measure was to kick in in 2026, then that would further reduce the cost, he added. .

“There’s lots to be considered,” he said, adding that the local pub, cafe and restaurant “plays a huge part” in towns and villages. 

All of Ireland’s main political parties, including Fianna Fáil and Fine Gael, committed to abolishing the means test for the carer’s allowance. 

However, Harris confirmed today that is will not be done in soley in this year’s budget. He said his party intends to deliver upon its promise, but said “it cannot be done in one budget”. 

It is “very important that Budget 2026 begins that process,” he added.