Cowen's Budget announcement will have implications for everyone, writes Laura Slattery

When the Minister for Finance, Mr Cowen, makes his first Budget speech next Wednesday, he could announce tax cuts and social welfare increases worth up to €1.5 billion, according to various economists' predictions.

The way in which this money is spread around will affect the net income, spending power and lifestyle choices of hundreds of thousands of families.

The case studies shown, compiled by PricewaterhouseCoopers on behalf of The Irish Times, outline some of social welfare and tax changes that six hypothetical families and one single person will be on the lookout for next week.

Each family will be waiting for the Minister to deliver their own particular idea of what constitutes "tax justice", but almost all will be hoping to benefit from either an increase in personal tax credits or a widening of the standard rate tax band.

The standard rate tax band currently has a cut-off point of €28,000. This means that workers pay income tax at the standard rate of 20 per cent on the first €28,000 in their pay packets. Anything else they earn above this figure attracts tax at the rate of 42 per cent.

The fact that the standard rate band has remained unchanged in recent years means that, thanks to salary inflation, more people have either started paying tax at the 42 per cent rate or seen a greater proportion of their earnings subjected to this higher rate.

Thus, in its pre-Budget submission, the Irish Congress of Trade Unions (ICTU) called for workers on the average industrial wage of €29,879 to be taken off the 42 per cent tax rate.

Our single worker Margaret could be among those to benefit from any increase.

Margaret earns a salary of €35,000, meaning she is paying tax at the 42 per cent rate on €7,000 of her main income, even before the tax liability on her company car is taken into account.

If the standard rate band cut-off point was to increase to €33,000, Margaret's annual tax bill could drop by €1,100 and only €2,000 of her main income would be subject to tax at the 42 per cent rate.

Our dual income couple, John and Caitriona, could also benefit from an increase to the standard rate tax band. This family's total income is €61,000, with John earning €40,000 and Caitriona earning €21,000.

At the moment, Caitriona is not using part of her €28,000 standard rate band. The €7,000 that is left unused can be transferred to John, who can earn €35,000 before he is charged tax at 42 per cent. If the standard rate band is increased, it could follow that more dual income couples will benefit from transfers like this, thus cutting the overall tax liability for some families.

However, the standard rate band is not fully transferable between spouses. The married person's tax band cut-off point is currently €37,000.

This means that Peter, the earner in our single income couple, pays tax at 42 per cent on just €13,000 of his €50,000 salary. If he was not married, Peter would pay 42 per cent on €32,000 of his salary.

Peter and Susan will be looking for any rise in the single person's standard rate band for individuals to be matched by a corresponding rise in the rate band for a married person. If there is not a corresponding rise, it will be seen as a move by Government toward greater tax individualisation.

The tax benefits enjoyed by Peter and Susan are not shared by our cohabiting couple, Eamon and Clare, who are paying about €350 per month more in income tax simply because they do not have a marriage certificate.

This is because Eamon cannot claim the increased standard rate tax band for a married person, nor can the couple claim the home carer's tax credit, currently €770.

But all of the families will be better off if the Minister increases the personal tax credits, which last year were frozen at €1,520 for a single person and exactly double that for a married couple.

Similarly, an increase in the PAYE tax credit (currently €1,040) would be good news all round.

ICTU also wants Mr Cowen to introduce tax relief for childcare costs, at a minimum of €20 a week and increasing to €50 a week in the case of receipted costs. This would benefit Peter and Susan, as Susan would like to return to work.

However, if no relief for childcare costs is introduced and Susan decides she will remain at home, the couple could instead benefit financially from an increase in the home carer's tax credit. This also applies to Colm and Sandra, our low-income couple.

Three of the case studies shown would have seen their monthly take-home pay dip in 2004 as a result of the introduction of PRSI and the application of PAYE to benefits-in-kind for the first time. These families will be eagerly waiting for some kind of compensation this time around.