Ms Caroline Casey with Imogen Connolly, one of the children in her care at the Hopes and Dreams creche in Carton, Sligo. Child benefit is to increase substantially. Photograph: James Connolly/GreenGraph
Low-paid families with children were the big winners in Mr McCreevy's fourth Budget.
Other groups to benefit significantly in the Minister for Finance's speech include pensioners, double income families with children and road hauliers.
The clawbacks come from well-paid self-employed people and proprietary directors and from firms with large numbers of highly-paid workers.
Almost 133,000 people have been taken out of the tax net and nearly 38 per cent of all workers will be exempt from income tax.
Tax rates are down to 42 per cent and 20 per cent, the bands have been widened and allowances increased substantially. A £1 billion (€1.1 billion) child benefit package over three years ensures every family with children benefits.
Single people on £20,000 and married couples on £20,000 where both are working will also feature among those benefiting most from the measures announced yesterday. If they have children, those gains will be significant. Families with one earner gain only slightly less as the Minister continued to proceed with individualisation, but at a slower pace than he outlined last year.
Mr McCreevy did not forget middle-income earners, of which 107,000 will no longer pay income tax at the top rate. Only 23 per cent of workers will remain on the higher rate after the widening of the standard rate band. Personal allowances rise by £800 for single people and by £1,600 for married couples. The PAYE allowance also rises by £1,000.
Pensioners benefit, with all people over 70 now entitled to a medical card. The Budget also provides a contributory old age pension increase of £10, bringing the weekly rate to £106 or £185.60 for a couple. Other social welfare recipients will receive £8 a week extra.
The Budget is being sold in part as an anti-inflation package. According to Mr McCreevy, inflation will fall back to 4.5 per cent in 2001. VAT is being cut by one percentage point, bringing it to 20 per cent and taking 0.4 per cent off the consumer price index. Diesel duty will fall by 6p a litre with a cut of 2p a litre on unleaded petrol
However, other elements of the anti-inflation package fell short of expectations. Measures to persuade people to save rather than spend include a tax exemption on the first £375 or £500 of savings income. Other proposals will be looked at in the Finance Bill.
The Budget was welcomed by the Irish Business Employers Confederation (IBEC) as a "bold" move. But economic director Mr Brian Geoghegan warned it had some inflation potential. "If all parties fulfil their commitments under the pay agreements, price pressures will be reduced."
The Minister did claw back some funds from high earning proprietary directors and the self-employed by abolishing the PRSI ceiling and lowering the rate. The PRSI ceiling has also been removed from employers, a move criticised by IBEC, which warned it would seek to have the measures changed before the Finance Bill was published.
"Employers will be hard pressed to protect competitiveness. The elimination of the PRSI ceiling is unwelcome and runs counter to the rationale of previous Budgets," Mr Geoghegan said.
The Minister also abolished probate tax which will allow people to inherit without paying this levy.