Most taxpayers will pay less and tens of thousands of lower earners will be removed from the income tax net altogether under measures to be announced in today's Budget.
The tax package will centre on a major increase in income tax allowances, together with a significant step towards the reform of the entire allowances system.
The result will be to increase the amount a single person can earn before entering the income tax net from £76 a week now towards the target level of £100.
In contrast with last year's Budget, which benefited higher earners, this time the Minister for Finance, Mr McCreevy, will aim the vast bulk of resources at low and middle income earners.
The Budget will also target the less well-off through a package of new spending measures. As part of this an eleventh-hour deal has been struck between the Departments of Health and Finance on an initiative to reduce hospital waiting lists.
The Minister for Health and Children, Mr Cowen, is expected to spend up to £20 million to tackle waiting lists of 35,405 in hospitals throughout the State.
With the Government coming under increasing pressure from the opposition on health issues, it is understood that the waiting lists initiative was approved at yesterday's Cabinet meeting.
Mr Cowen will be aiming to match the £20 million in dedicated funding given by the Rainbow Coalition to selected specialities and hospitals after the Waiting List Initiative was launched in 1993. Some £8 million was allocated to reducing waiting lists in 1997, and £12 million this year.
Figures released by the Minister, Mr Cowen, to his Fine Gael counterpart, Mr Alan Shatter, yesterday showed that some 35,405 people were on hospital waiting lists at the end of September.
Other additional spending will go towards a rise of almost £6 a week in old age pensions, an increase in the carers' allowance and measures to make more carers eligible for this money, and an increase in general welfare payments by slightly more than inflation.
Measures will also be introduced to encourage more spending on creches, as part of a child care package.
Such is the strength of the public finances that Mr McCreevy will still be able to aim for a Budget surplus of revenue over spending of over £1 billion from 1999.
In the tax area, the Minister will push up personal tax allowances and announce the implementation of the first move towards replacing allowances with a system of tax credits, where all taxpayers get the same cash deduction.
As a major step in this direction, the Minister now appears poised to announce a move to allow both the PAYE tax allowance and personal allowances to be claimed only at the standard income tax rate.
However, it is unclear whether both will be changed in 1999, or whether some of the reform will be phased in over a couple of Budgets.
For the 1999 Budget these changes will offer a major boost to the less well off, as the size of the allowances will rise, while better-off taxpayers will gain, but by proportionately less.
An increase in the standard income tax rate band will ensure that less income is taxed at the higher 46 per cent rate. The business sector will benefit from a reduction in corporation tax rates.