Couples with a joint income of less than £100,000 (€127,000) a year should not pay the top tax rate but should instead pay at 35 per cent, Fine Gael said yesterday. The party also proposed changes that would exempt the first £170 a week from income tax, and increase the inheritance tax threshold on family homes.

In its pre-Budget submission, Fine Gael also said the Government should use the Budget to place the economy on a good long-term footing.

The party's spokesman on finance, Mr Michael Noonan TD, said there were two major problems facing the Republic: a lack of competitiveness spurred by unaffordable wage demands, and the shortage of workers.

The party also called for an increase in the capital acquisitions tax free allowance threshold for children inheriting family homes, up to £400,000 each.