Separating tax bands for husbands and wives is certainly the most controversial part of an otherwise innovative and generous Budget.

There is no doubt that the Minister for Finance, Mr McCreevy, was thinking about the needs of the economy when he chose to follow this route, favouring couples where both work.

If the Minister is right and only 12 per cent of people will pay tax at the top rate in 2002, the taxation system will certainly have been transformed. In addition the promise that a single person will be able to earn £28,000 (€35,553) before paying the higher rate of tax is also an extraordinary transformation.

According to the Minister, there are 103,000 single-earner families and 130,000 dual-earners, paying tax at the higher rate. The move only affects families where the single earner earns £28,000 or more.

It is also true that a family with two people on £18,000 and another with one earner on £36,000 will have very different costs.

But the problem with the measure, as with most in the tax and social welfare system is that it is very blunt and it is not just couples on middle income with children who benefit, nor was it debated in public or even among the social partners. Neither had it been made part of any election manifesto.

Mr McCreevy insisted that the dual-income family has been discriminated against since 1980 when personal allowances were simply doubled for single-earner married households.

The full impact of the measure will not be felt for three years. Next year, a family with one earner on £50,000 will pay £13,552 in tax, £1,099 less than the current year.

Another family with an income of £50,000 but two earners will pay £12,012 in tax, a saving of £2,444 over the current tax year.

The additional saving of the dual-earning household of £1,540 is large but can probably be justified in terms of the extra expenses that family incurs in terms of two sets of travel costs and perhaps childcare. It amounts to £128 a month.

In three years, however, the difference will be far larger. If the income of both these families has risen to £56,000, the single earner family will pay roughly £16,000 in tax whereas a couple where both earn £28,000 will be paying a little under £10,000, a difference of £6,160 - a very significant sum which amounts to £513 a month after tax.

As one economist pointed out yesterday, in one way the Minister is taxing the imputed benefit of having a stay-at-home spouse.

The concept of individualisation was first raised by the current attorney general, Mr Michael McDowell, in the Dail about three years ago. It again raised its head in the deliberations of the working group examining treatment of married, cohabiting and one-parent families under the tax and social welfare codes.

The group comprised representatives of the Department of Finance, Revenue Commissioners, Department of Social Community and Family Affairs, Department of the Taoiseach, Department of Enterprise, Trade and Employment, Department of Justice, Combat Poverty Agency and the National Social Services Board.

The options which were considered by the working group included retaining the transferability of the bands if a household had a child under 18. That would mean no discrimination against mothers who stayed at home with their children and certainly that or a version would have been an option. If it were taken it could have been extended to non-married couples with children.

The group recommended that large increase in child benefit be combined with the move and an allowance for stay-at-home pa rents of children under three and a special investment in preschooling after the age of three.

Additional recommendations included putting special safeguards in place for older women who had been out of the work force for a number of years. It also pointed out that there were problems expecting people to change who have taken their decision to stay at home on the basis of the current tax system.

According to a document released by the ESRI in September, the Department of Finance objected to what the Minister has now introduced on the basis that the "option ignores the key justification for the introduction of the existing married treatment - the need to avoid unjustifiable discrimination against one-earner married households".

That quote was taken from a speech by George Colley when the system was introduced in 1980.

Internationally there is some justification for individual taxation. This State was at one end of the spectrum with other countries such as Britain being far less generous in their treatment of one-earner couples. Options in other countries include giving a percentage of the tax free allowance to a spouse - in Britain it is £1,970 compared with a full personal allowance of £4,375.