The tax bands should be widened so all those earning the average industrial wage are not liable for tax at the higher rate of 48 per cent, the Irish Exporters Association (IEA) has said in its pre-budget submission.

The association says exporters in the Republic pay employees on average £50 a week more than their competitors in Britain in order to offset the income tax differential.

"Apart from the business logic of improving our competitive position by reducing taxes on the lower paid, the relative buoyancy of the 1997 exchequer returns allows us to benefit without imposing extra costs on exporters," according to IEA president, Mr Matt Murphy.