There has been a rash of speculation about the shape of the December Budget in the last week. Weekend reports suggested Charlie McCreevy might abandon his election commitment to cut the main income tax rates and concentrate instead on widening the standard rate income tax band and increasing personal allowances. These suggestions met with denials from official sources more of the same can be expected in the weeks ahead.

The truth is the Government partners are still far from deciding the final shape of the Budget package. Some preliminary examination of the options has been undertaken, but the final haggling on the shape of the budgetary arithmetic has not yet started.

The signs are that the overall size of the income tax package will be between £350 million and £400 million. This will allow the Minister to claim that he is more than meeting the terms of Programme 2000,even though the trade unions have been demanding cuts of £500 million plus.

The Budget is certain to include reductions in both the main income tax rates of 26 per cent and 48 per cent the only question is how much? The PDs will probably push for two points off each rate, but may not get all that they want. And in a bid to meet demands from unions and others to focus on the lower paid, a significant increase in the personal income tax allowance is also expected. In its election manifesto, Fianna Fail also had an array of other promises. They ranged from a new introductory income tax rate of 20 per cent to special reliefs to meet child-minding expenses. It will be interesting to see how many of these are buried immediately, or in timehonoured fashion, submitted to some committee for "further examination".

One thing is certain, there will be a further cut in the main 36 per cent corporation tax rate. It will fall by at least two percentage points and possibly more.