The Taoiseach indicated that high earners will benefit in future Budgets.

Mr Ahern said they had done well in last year's Budget. "This year the benefits are more evenly spread. But a married couple on one income with four children taxed under PAYE at £40,000 a year will be £800 better off in tax terms compared to a little over £900 last year, and approximately the same as in Deputy Ruairi Quinn's last Budget.

"The net reduction in levies of a quarter of one per cent will be of benefit across their entire income. Taking our two Budgets together, the higher earner has nothing to complain about, and can look forward to future budgets under this Government which will ease a burden that is heavier than in most other countries."

Speaking during the resumed Budget debate, Mr Ahern said that while underpinning economic growth and social partnership, the Government's overriding objective was to give a boost to people on low incomes, to encourage those who wanted to take up a job and to assist those who had retired. He said 80,000 people would be taken out of the tax net this year, which was considerably more than the 15,000 removed last year and the 10,000 removed in the Rainbow's last Budget.

There was no significant clawback as far as indirect taxation was concerned, he added. Mr Ahern said every Budget had a lighter element. "This year, it is a Budget for the punter. Horse-racing is a national sport enjoyed by all sectors of the population. Keeping the best in Ireland is another way of keeping the racecourses open. I look forward to my next flutter at keener odds."

The Fine Gael leader, Mr John Bruton, claimed the Budget was flawed by an internal contradiction. "The Minister has tried to stimulate the economy while at the same time failing to take the necessary steps to give it enhanced capacity to grow. It was like trying to inflate a child's swimming ring, while the child is still standing on it.

"This Budget is like a huge blood transfusion to a body with blocked arteries. The blockages in the arteries of the Irish economy are most visible every day in traffic jams. The blockages in the Irish economy are also to be seen in spiralling house prices, the unavailability of child care and the lengthening waiting lists for medical care."

Mr Bruton said the Minister had come into the Dail on Wednesday with a Budget surplus of £400 a year to distribute for every man, woman and child in the State. "Yet child benefit will only go up by £36 a year. Old age pensions will only go up by £312 a year."

He added that the standard-rating of income tax allowances was welcome and would remove a structural unfairness from the tax system which would be potentially helpful for future Budgets.

"But the contribution of the two Budgets so far of the FF-PD coalition to tax fairness has been one that has widened the gap between lower and upper income groups. A single person on £5,000 a year is £14 a week better off after those two Budgets, but a single person on £15,000 a year is over £27 a week better off. For a married couple, the difference is even more marked, with a gain of only £18 a week for the lower income couple, as against £38.67 per week for the higher income couple."

The Democratic Left leader, Mr Proinsias De Rossa, said that if the Minister for Finance deserved credit for tax changes, he deserved contempt for the way in which he had turned his back on the most disadvantaged in our society.

"The Minister's political and economic conservatism is highlighted by his decision to allow for a current Budget surplus in excess of £2.3 billion next year. The Minister has basically decided to tuck £2.3 billion into the national mattress when housing, health, education and child care are crying out for additional resources. On every occasion over recent years the Budget out-turn has been better than expected, so it is quite likely that the surplus will actually be greater than £2.3 billion.

"And I don't think that anyone will be impressed by the Minister's folksy parable, with which he ended his speech yesterday, about putting money away for a rainy day. Every family knows that if the roof is leaking, if a child needs new shoes, if the baby needs medical treatment, they will spend the money on these priorities and not put it away for the rainy day."