The PAYE tax allowance should be doubled and converted to a tax credit, according to the main public service union, IMPACT.
It says in its Budget submission such a move would boost the pretax earnings of the low paid and encourage more married women to return to the workforce at little cost to the Exchequer.
The union, which represents clerical and technical grades in the Public Service, including the Revenue Commissioners, says the focus of Budget debates should switch from cutting tax rates to taking cost-effective measures that reward work.
IMPACT's approach reflects thinking in the Revenue Commissioners. "A Budget for the lower- and middle-income group earners is essential to bolster support for national agreements," the union's general secretary, Mr Peter McLoone, said yesterday. The proposals would increase a single worker's tax-free allowance from about £76 a week to more than £91, with a corresponding increase for married couples.
This would also make a return to work more attractive to spouses whose partners are already working and claiming all the other allowances, said IMPACT's national officer for the civil service, Mr Paddy Keating. "At present the only thing a spouse gets is £16 a week tax-free. This measure would increase tax-free earnings to £32 a week and give a real incentive to return to work."
He said the PAYE allowance has not increased from £800 since 1988. He also called for indexation of tax allowances and tax credits.
The union is also seeking tax relief for child-care expenses, provided children are placed in a registered creche. The relief should be at the standard rate and subject to a ceiling.
On corporation tax, the union argues the loss of revenue arising from corporation tax should not be borne by other sectors. If this happens, IMPACT predicts increasing numbers of self-employed people will incorporate themselves as limited companies.
It says the loss in revenue should be identified annually and alternative taxation imposed on the business sector to compensate. It says corporation tax cuts should be linked to the implementation of the new national minimum wage.
The union criticises capital gains tax cuts and says that, for the first time, tax rates on this form of unearned income will be lower than the bottom rate of tax on earned income.