Abolishing inheritance tax

ARGUMENTS FOR:

Inheritance tax no longer fulfils its original intention. Initially designed to raise money from the very wealthy, it now penalises more and more members of the middle classes. The very wealthy, however, can often afford financial guidance and find ways to avoid having to pay.

The tax-free threshold of £300,000 has risen only marginally while house prices have rocketed. This means that many people who inherit property struggle to find the cash to pay the inheritance tax due on it.

As well as accounting for less than one per cent of total tax revenues, inheritance tax is also relatively expensive to collect.

Society needs a way to transfer wealth from generation to generation, especially as the young now struggle to get a foot on the property ladder.

In taking a share of money from people who have already contributed income and capital gains taxes, inheritance tax is a form of double taxation.

The First Post guide to the issue of the day

ARGUMENTS AGAINST:

The government will have to find ways of replacing the annual sum of £4bn raised by inheritance tax.

Only a small proportion of households have to worry about death duties. Treasury figures for 2006 indicated that a mere six per cent of estates are eligible.

Children who inherit their parents' wealth have done nothing to earn it. Taxing them is one way of redistributing income and ensuring a fairer society.

Any attempts at raising this money through alternate means, for instance green taxes, would be felt most by the poor.

FIRST POSTED OCTOBER 1, 2007