The Budget has come under strong attack from the Irish National Organisation of the Unemployed (INOU) and IMPACT, the union representing tax officials. Both say that it will widen the gap between rich and poor.

IMPACT's national secretary, Mr Paddy Keating said there would be more people paying tax at the highest rate by the end of next year than are paying it at present. He also predicted that the Budget would fuel inflation and pay militancy.

Mr Keating was speaking after IMPACT's tax committee, comprising union members in the Revenue Commissioners, spent yesterday considering the Budget proposals in detail. "While the Government has delivered on Partnership 2000 in terms of nominal amounts given in tax relief, the balance is inequitable," Mr Keating said.

The low increase in personal allowances and nominal widening of the standard tax band would not be sufficient to keep many people on the average industrial wage out of the top tax rates, he said. The 4.5 per cent pay rise due to private sector workers next year would mean more of them would be paying tax at the top rate.

There had been no increase in the PAYE allowance and people on £16,000 to £17,000 a year would be tempted to seek significant pay rises to compensate for paying more tax. Mr Keating also criticised the dramatic halving of capital gains tax, from 40 per cent to 20 per cent. This was "a speculators' charter, and a charter for big speculators at that", he said. While capital gains tax is falling, the reduction in the threshold for tax liability from £1,000 to £500 means that many small investors, including workers in profit sharing schemes, will now be in the tax net.

At a post-Budget forum of the INOU, the organisation's general secretary, Mr Mike Allen, said the tax changes actively promoted social inequity. "Instead of removing the lowest-paid workers from the tax net and, therefore, increasing the incentive to take up low-paid employment, the Government chooses to invest in high income earners," he said.

There had been a commitment in the National Anti-Poverty Strategy to "poverty proof" future budgets, but this commitment had obviously been broken. "When the economic boom is over, we will look out over the devastated communities as they raise yet another generation into poverty and unemployment and wonder why we failed to do anything during the good times."