The Minister for Finance is set to unveil a £1 billion three-year child-benefit package in his Budget today.
That would mean increases of about £30 a month over each of the next three years for all children, regardless of age or family circumstance. However, money may be front-loaded this year, with increases of up to £10 a week per child.
The allocation will result in a near-doubling this year of child benefit, which is currently £42.50 a month for the first two children and £56 a month for third and subsequent children.
Ms Rosheen Callender of SIPTU has warned that the expected increases in the Budget will not go nearly far enough for working parents, who are paying up to £200 (€254) a week for childcare.
The child benefit package is likely to cost about £500 million in a full year. However, child benefit increases are not normally payable until September, although this may be addressed today. The cost will be defrayed in part through the proceeds to the State of the proposed sale of ICC Bank to Bank of Scotland and TSB to Irish Life & Permanent. The sell-offs will bring a net £522 million into the Exchequer in 2001.
Large rises in pension and other social welfare payments are also expected to be announced by Mr McCreevy in his Budget speech, which will be delivered at 4.15 p.m. The elderly, carers and those on invalidity benefit are expected to benefit most.
Apart from this large-scale spending package, the Minister is also ready to unveil a £1 billion package benefiting all taxpayers. The top and standard rates of tax will be cut by two percentage points each, to 20 per cent and 42 per cent respectively, following sustained lobbying by the Tanaiste, Ms Harney.
Increases in the personal and PAYE allowances of about £1,000 are also part of the package aimed at removing more low-paid people from the tax net.
The Minister will continue with individualisation, increasing the standard-rate tax band to about £21,000. The extent of the increase for single-income married couples is not clear.
Corporation tax will also continue its downward trajectory towards 12.5 per cent with a decrease of four percentage points. Other taxes such as capital gains tax are not expected to change.
The Minister will concentrate on the anti-inflationary part of the package. A cut of up to two percentage points in VAT can be expected, Every percentage point will take about 0.4 percent off the consumer price index.
This, too, may be presented as part of a three-year package designed to bring Irish VAT rates into line with those in Europe.
Mr McCreevy is expected also to announce the broad parameters of a new savings bond designed to encourage people to save. The details of how this will be worked out in the tax system will be left to the Finance Bill.
Road hauliers are looking to see at least part of their demands being met, probably with incentives to switch to more environmentally friendly vehicles.