The Finance Bill will remove all those on the minimum wage 90,000 - from the tax net, and exclude workers on the average industrial wage - 55,000 from the higher tax rate, Minister for Finance Brian Cowen told the Dáil.
Introducing the legislation which implements the provisions of the Budget, Mr Cowen said it would also confirm the restrictions on the use of tax reliefs by high-income tax payers to secure greater equity in the tax system and phase out various existing tax scheme and exemptions.
Referring to the controversial tax relief schemes, which resulted in almost €3 billion in taxes forgone, the Minister pointed out that about two dozen schemes were investigated. While he was committed to cost-benefit assessment of any new schemes and time limits, he did not believe it was necessary to include this in legislation.
He said Opposition criticism which created the impression that there was a "substantial body of high-income individuals who pay little or no tax", was a "distortion of the position".
In 2006, "the top 1 per cent of income earners will pay approximately 20 per cent of all income tax collected".
But Fine Gael's finance spokesman Richard Bruton said the Bill provided for a "further extension of the various property-based tax reliefs. This is happening even though the Government has known for years that these tax reliefs had outlived their usefulness". It was already evident in 2000 that these reliefs had run out of rope, he said.
They were definitively to end in 2004, but "the Government changed its mind a year later, when it extended the timescale from 2004 to 2006. We are now seeing a further extension, albeit on a partial basis to 2008."
The restrictions now being introduced did not go far enough, he said.
"One can still invest €250,000 in a scheme, plus €250,000 through a pension fund. Some €500,000 is still allowable without a cent of tax being paid."
Labour's finance spokeswoman Joan Burton said the Bill would provide "a number of hidden nuggets for Ireland's super rich".
Not only would there be €25 million tax-free payouts to pensioners, but they could be passed to their spouse and the next generation.
