Fine Gael yesterday promised a £2 billion tax giveaway, including the exemption from tax of the first £170 of weekly income for all workers.
The party's radical plan also proposed extending the standard tax band to take 160,000 taxpayers off the top rate and the creation of a new middle rate of 35 per cent for up to a quarter of PAYE workers.
Publishing his party's proposal, the Fine Gael spokesman on finance, Mr Michael Noonan, said the plan would give relief across the range of income levels and encourage a range of people with different skill levels to participate in the workforce.
"All forecasts of Ireland's continuing prosperity are based on a premise that economic growth will continue. It cannot, however, continue if there are insufficient workers. This income-tax blueprint is specifically designed to urgently tackle that problem head-on," he said.
Fine Gael said that in government it would extend the standard tax rate so that no person with an income less than £17,500 for a single worker or £35,000 for a married couple would pay tax at the high rate.
The party would introduce a new middle tax rate of 35 per cent on all taxable income between £17,500 and £50,000 for a single person and between £35,000 and £100,000 for a married couple.
The higher rate of 46 per cent would be retained only for a single person earning £50,000 or more or a married couple with a joint income of £100,000 or more.
The party also pledged to increase the 2 per cent health levy threshold from its current level of £11,250 to £17,500.
The party reaffirmed the promise made by the party leader, Mr John Bruton, at the last annual conference to increase child benefit to £25 a week for all children aged under five. "Fine Gael believes that this is the most effective form of family support. It does not discriminate between families where one or both spouses work. It does allow parents the discretion to spend this new support benefit on childcare or other appropriate needs," said Mr Noonan.
Fine Gael said the introduction of new "Earned Income Tax Credits" coupled with the widening of personal allowances would remove all income up to £170 a week from the tax net. The new tax credits would be achieved by increasing the £1,000 PAYE allowance to £3,600 and allowing it to all taxpayers, including pensioners and the self-employed.
Personal allowances would be increased by £1,000 for a single person and £2,000 for a married couple. "These two proposals will remove all workers earning up to the minimum wage completely from the tax net," said Mr Noonan.
He said the party was determined to introduce a system where the burden of tax was significantly reduced for low-paid and middle-income taxpayers.
But Fine Gael's tax figures were last night challenged by a Government source. The source claimed that the package outlined by the party would cost the State u £2.35 billion, u350 £350 million more than the u £2 billion Mr Noonan said.