The Budget tax cuts greatly exceeded any package examined by the key group of advisers, the Tax Strategy Group.

A discussion paper prepared for the group of key civil servants and Government advisers examined a variety of packages costing around £700 million (€889 million).

The Minister for Finance, Mr McCreevy, delivered a package of some £1.2 billion in cuts on Budget Day. The papers prepared for the group ahead of the Budget recommended that it should not add unduly to inflation and noted that the IMF had advised only limited tax cuts.

According to the papers, the advice from international agencies such as the OECD, the IMF and EU finance ministers was to use the Budget to ensure stability "in the context of overheating".

They said the IMF had recommended that, while the commitment to further moderate tax cuts in the Programme for Prosperity and Fairness should be respected, pressure for larger tax cuts should be resisted because such reduction "would add to the risks of overheating in the near term".

The papers released under the Freedom of Information Act suggest the key choice on income tax was between increasing tax credits, widening the individual standard rate tax band and reducing tax rates. The Minister managed to do all three.

There was also some discussion of the individualisation proposals from a year earlier. The paper noted that any upward movement in the "married, one earner" band would make individualisation more expensive to achieve and possibly delay its final implementation.

But the group decided that increasing the band somewhat might be a better approach than increasing the home carers' allowance.

Reducing VAT on specific items rather than opting for a standard rate reduction was debated, but it would not have had the desired impact on inflation. Cutting the excise duty on tobacco would have the greatest impact on reducing the consumer price index (CPI), but a VAT reduction, while the most expensive option, had other advantages such as competitiveness for e-commerce.

Justifying a price cut on cigarettes was also seen as difficult. Childcare appeared to be one of the most difficult issues the group discussed. The basic choice was between a universal payment and one targeted at working parents.

A universal payment was seen as having a less predictable effect on the labour force. It also considered payment to working families under the PRSI system but found this could be imprudent without an offsetting increase in either employee or employer rates.

The universal payment was targeted, with a substantial increase in child benefit.

The papers also reveal why little was done to encourage savings in the Budget despite intense speculation that such a package would be introduced.

Both the National Treasury Management Agency and the Department of Finance had reservations about developing State small savings schemes as the only instrument available on a general basis.

The Tax Strategy Group also considered cutting the stamp duty on share trading.

While it was argued this would make trading in Irish equities level with elsewhere, it was thought that the fundamental problems of Irish equities have more to do with the advent of the euro, small companies and changes in the way institutions are investing. The group discussed the possibility that the rate could be reduced over time.