Higher income earners will gain most from the 1998 Budget, in which the Minister for Finance unveiled a package of record tax reductions. The tax cuts will cost the Exchequer £330 million next year, or more than £500 million in a full year. As well as reducing income tax, the package also contained the expected cut in tax on company profits.
And an unprecedented halving of the capital gains tax rate to 20 per cent will benefit people cashing in their investments.
Mr McCreevy also spent more than £100 million on increasing social welfare payments. This includes a £5 per week rise in old age pensions and a £3 per week rise for other welfare recipients.
Child benefit is to rise by £1.50 a month for the first and second child and £3.50 a month for subsequent children.
All taxpayers will be better off as a result of the package, which included a two percentage point reduction in the two main income tax rates to 24 per cent and 46 per cent. There were also increases in personal income tax allowances.
But the concentration of resources on cutting income tax rates means that higher earners will gain the most. A single person on £15,000 will gain £7.80 a week, while someone on £50,000 will benefit by £20 a week.
Married earners on higher wages will also do considerably better than those on average earnings. A married couple with one spouse working on £15,000 will gain £6.40 a week, while a similar couple on £50,000 will gain in excess of £21.50.
The better off will also gain most from the reduction in the capital gains tax rate from 40 per cent to 20 per cent.
Meanwhile the main rate of corporation tax on profits of service sector companies has been cut from 36 per cent to 32 per cent, in a move towards a single rate for all industry of 12.5 per cent.
The Budget was agreed after intensive discussions between the two Government partners. The Progressive Democrats maintained that it proved the true extent of the party's role in this Government.
In his Budget briefing the Minister, Mr McCreevy, said it had been Fianna Fail's aim since 1995 that no earners would pay tax and PRSI greater than 50 per cent of their income.
But opposition speakers condemned it as "a rich man's Budget", a "kickback" to the rich, and a prescription for assisting the wealthy. The opposition parties united in condemning it as a lost opportunity to spread the benefits of the Celtic Tiger.
The Labour Party leader, Mr Ruairi Quinn, said the package demonstrates the "clear ideological gulf across Leinster House."
The trade unions said the Minister had cut the top income tax rate at the expense of concessions to the lower paid. They warned the Government that this could jeopardise the prospects for a new national agreement.
The Society of St Vincent de Paul said the tax changes had yet again widened the gap between, on the one hand, those on unemployment assistance or low pay, and on the other people on higher salary levels.
However, the package was broadly welcomed by business, which expressed satisfaction with changes in corporation tax and PRSI.
The employers' lobby group IBEC said that in general the Budget had underpinned Partnership 2000 and would help investment and employment and contribute to social inclusion.
The only major losers from the 1998 package are smokers, who will be hit by a 10p increase on a package of 20 cigarettes, while petrol prices are also to rise by 4p a litre. These increases became effective immediately.
However, car prices will fall following a reduction in vehicle registration tax.
As well as higher spending on general welfare increases, Mr McCreevy also allocated £36.8 million in extra funding to the health services, including extra resources to help the handicapped. New measures will also help the unemployed in returning to work.
Perhaps the biggest winner of all was the GAA, which was allocated £20 million from National Lottery Funds towards the redevelopment of Croke Park. The grant will be paid over the next three years.
Meanwhile £3.5 million is being provided next year towards tourism marketing initiatives related to the Ryder Cup.
