The Budget tax-cutting package now looks certain to concentrate significant resources on increasing personal income tax allowances, according to a document drawn up by the social partners.

The Government should also widen the standard rate income tax band, the paper says, and these measures should be "complemented, if necessary, by a reduction in the standard income tax rate". Meanwhile, the document clearly signals that new measures are under consideration to combat tax evasion.

The document was drawn up in negotiations chaired by the Department of the Taoiseach between the employers, trade unions, farmers and community groups which are party to Programme 2000. It is the clearest signal yet that the Budget tax package will take a completely different approach to the 1998 package, under which the vast bulk of tax-cutting resources were devoted to cutting the two income tax rates.

Increasing personal tax allowances is the most direct way of helping the lower paid, as higher personal allowances mean taxpayers have to earn more before entering the tax net, while increases give proportionately large gains to lower earners. The social partners believe these allowances should be increased "significantly" and that the standard rate income tax band should be widened.

Widening the standard rate band helps middle-income earners most as it ensures they can earn more before entering the higher 46 per cent rate band. The Minister for Finance, Mr McCreevy, may have enough funds to reduce the standard 24 per cent income tax rate by one or two percentage points, but the document indicates clearly that a cut in the higher 46 per cent rate is most unlikely this year. New measures to combat tax evasion are also under consideration. The document says "Budget 99 should include provision to strengthen the measures to counter tax evasion, as well as other practices synonymous with black-market activity".

One measure likely to be considered is the granting of wider powers to the Revenue Commissioners to examine bank accounts in cases where tax evasion is suspected.

The document also makes a strong case for higher spending to combat social exclusion.