Budget 2000 has come in for widespread criticism on two grounds. First, it has been attacked as unfair because of the proposed change in the tax treatment of married couples. Second, it has been criticised because its tax cuts benefit to higher earners most.

These two issues have become entangled in a confused and quite misleading way. There is no doubt that the Budget has favoured high earners most of all. This is because cuts in tax rates, particularly the top rate of tax, favour the better off. The change in the tax treatment of couples does not favour higher earners. Wednesday's change to the tax treatment of couples actually reduces their gains. If the Government were to give way to the storm of protest over the change in tax structure, the main beneficiaries would be high earners.

For example, if the standard rate tax band were widened over the next three years to £28,000, while retaining the old tax treatment of couples, the additional cost would be of the order of £450 million.

Almost £250 million of this amount would go to the richest 10 per cent of families and more than three-quarters of the benefit would go to the richest 20 per cent of families.

Furthermore, about £150 million would go to families without dependent children. Thinking about fairness, consider a one-earner couple earning £40,000 per year compared with a two-earner couple where each spouse earns £20,000 per year. At present, each has a similar tax bill, as if each had the same total resources and ability to pay.

But is the present system fair? Which family is better off, the one which earns £40,000 and has one partner available to care for children and/or manage the home, or the couple which earns the same cash amount, but does not have the benefits arising from having one partner in the home? Most would agree that, at the same cash income level, a one-earner couple is indeed better off, not just because of the costs of participating in the labour market but also because of the value of the work done in the home.

Yesterday's proposals recognise this as affecting the different couples' ability to pay. At the end of the Government's proposed three-year programme, the one-earner couple on £40,000 would still be better off than the two-earner couple in terms of total resources, unless the value they place on the work done by the partner in the home is less than £50 per week. This seems highly unlikely when the minimum wage available in the labour market is soon to be £170 per week. Since retaining the existing tax treatment of couples would serve to skew tax cuts further towards the better off, what other options are open? If the key concern is the wellbeing of children, there is a much simpler and more direct way of providing resources for their benefit. Child benefit has the same cash value for families at different income levels, and unlike tax-based treatment of the family, reaches all income groups. For the same Exchequer cost, most families with children would gain more from an a further and more substantial increase in child benefit - far greater than the £8 per month decided in the Budget - than from reverting to the current tax treatment of couples.

If, as proposed by the Commission on the Family, the State should increase investment in the under-four age group, a substantially higher rate of payment, of the order of £30 per week, could be justified for this group, for whom the time and/or money costs of childcare are greatest. This would also be an evenhanded way of assisting both one-earner and two-earner couples with children, giving them greater freedom to make decisions about how best to care for their children.

Tim Callan is a research professor at the Economic and Social Research Institute.