The Government is set to announce a Budget package which will include substantial tax cuts and new measures to encourage married women to return to work. Official forecasts, published today, show that the Exchequer finances next year will be even healthier than predicted, giving scope for a generous Budget.
The pre-Budget White Paper estimates that the Government will have another record surplus of revenue over spending. Before taking account of Budget changes the Department of Finance forecasts that the surplus will be £1.9 billion.
As a result, the Minister for Finance, Mr McCreevy, is likely to be able to announce up to £1 billion in tax cuts and spending increases next Wednesday. The tax package, likely to cost about £750 million in a full year, will be finalised after the weekend.
The Minister is likely to cut the top 46 per cent and standard 24 per cent tax rates and to complete the move to a tax credit system.
A package targeted at childcare and helping women to return to work is also anticipated. A significant increase in the PAYE tax credit, currently £1,000, is expected.
A new form of child benefit payment, which would be taxable, is being considered. This would be paid in addition to the existing non-taxable child benefit and would offer additional money to all, but give the largest benefits to the less well off.
Measures to encourage the building of creches as well as allowances for people employed in the childcare industry are also forecast.
A substantial spending package is expected. This year the social welfare fund is in surplus, allowing the Minister to fund large increases without damaging his spending targets.