THE next Minister for Finance will be in a most enviable position. He or she will be presiding over a further period of economic boom with growing employment and falling tax. The room for manoeuvre in government finances is greater than it has been in over a decade or perhaps ever.

Ireland is doing so well and growing at such a rate that the requirements for monetary union are not causing any problems and are unlikely to do so over the lifetime of the next parliament. Only a period of prolonged higher interest rates or a protracted recession could conceivably put us in danger of failing to keep to the terms of the pact.

As a result, the opportunity is there for whoever is in power to go on spending, cutting taxes and keep borrowing down.

The different tax proposals on the table from all the major parties will cost around £300 million a year. Even under the terms of the ESRI's medium term review that should be possible.

The ESRI says tax cuts of this kind can be implemented safely providing the timing is right and everything else is held in line.

That is probably the nub of the question. Social consensus and moderate wage demands are at the heart of any prediction of continuing growth. A continuing trade off between tax cuts and low wage demands is probably essential.

This should allow a Government the option of keeping the borrowing requirement at between 0 and 2 per cent.

Of course, there is the argument that a Government should focus on cutting the national debt rather than simply distributing the excess to the electorate. However, in the experience of most other countries, growth and employment both fare better with tax cuts rather than debt reductions.

In a small open economy such as Ireland people are inclined to simply spend more on imports if their take home pay is increased and so this has relatively little impact on the economy. But cutting tax rates also - allows moderation in wade demands. As this benefits employers it leads to an improvement in competitiveness and thus to more jobs and a boost for the economy as a whole.

In any case, our debt ratio has already fallen significantly and as the economy grows will naturally fall some way further. It is also of more benefit to the Government to pay off foreign debt before domestic debt and that is what has been happening over the past 10 years. Foreign debt still amounts to almost one third of the total, so further movements in this direction could be welcome.

Tax cuts, however, will have to be implemented with some prudence. The ESRI cautions against giving away too much in a time of boom. There will inevitably be years over the lifetime of the next parliament when the economy is growing more slowly than in other years, and it is then that it would be advantageous to cut taxes.

HOWEVER, that is not something which Irish policymakers have ever been very adept at. Our whole cycle is inclined to be "procyclical". In other words, when in a recession policy tends to contract, thereby prolonging the bust. In times of boom, on the other hand, policymakers are more inclined to dole out the largesse, thereby priming the pump.

However, it is on the specifics of the tax cuts that the election will be fought. For the majority of tax payers there is probably little difference for them in the various proposals. However those near the top or the bottom of the income scales would be affected to a greater degree.

People at the bottom of the scale who are facing a choice of working or remaining on unemployment benefit are particularly sensitive. These people are likely to benefit mostly from an increase in the personal allowance, enabling them to earn more money without paying tax. So far Fine Gael has gone furthest in this direction.

The situation of many women workers, particularly those with dependants, is also very sensitive. It is often more expensive for women to take up employment, as they face higher set up costs in the form of childminding and other expenses.

In addition, the main earner in a marriage can often be pushed into the higher rate of tax because the spouse has entered the workforce. It is also likely that these people would benefit from widening of the bands.

In the end it probably does not make a huge amount of difference whether particular groups are targeted by cuts in the rates or widening of the bands. However, from a political point of view it is probably easier to sell a straight cut in the tax rate to an electorate who can immediately envisage the benefits.

THE real question for many voters then is where the different parties are actually targeting the bulk of their reductions. Fine Gael's policies are firmly targeted at low and middle income earners. However top rate earners will also gain significantly from a cut in the top rate from 48 per cent to 45 per cent.

Fianna Fail's pledge to cut the top rate of tax to 43 per cent would obviously favour this group to a greater extent, with the Progressive Democrats going even further and aiming for a top rate of 40 per cent.

This would go some way to closing the tax gap with Britain for higher earners. The top rate here of income and social taxes adds up to 54.75 per cent, compared with Germany's 53 per cent and Denmark's 56 per cent. However, the top rate in the UK is only 40 per cent. This means that a UK executive earning £35,337 would need to earn £44,026 here to take home £25,000.

It is undoubtedly the Progressive Democrats who have gone furthest to attract this income sector.

Fianna Fail is also targeting families with children. It has proposed tax relief at the standard rate on up to £2,000 of vouched spending on registered childminders. This is worth a maximum of £520 a year to such families.

This relief will also be available to those caring for the aged or handicapped and to married people who stay at home to look after their children.

Fine Gael has yet to unveil its proposals in this area. However, it is understood that its focus will be on increases in child support. To provide a similar benefit to families it would need to provide average increases of just over £43 a month in child benefit.