The Government will be reducing the income tax rate for those who earn between €19,501 and €60,000 to 29 per cent from the current 32 per cent, a measure that means it will forfeit €13 million in revenue.

This measure is part of the gradual reduction in income tax rates started by the previous government, and which the Labour administration had vowed to proceed with as an electoral pledge.

However, in an unexpected move the Government announced that it will raise the minimum threshold of the tax band for the parent computation announced in 2011, to €9,800 from €9,300. In this way, households will see their income increase by €75 per year. The measure will cost the Government €1.8 million.

‘Aggressive’ measures to try to entice women

In addition, parents with children in full-time education will qualify for the computation for two extra years as the cap has been raised to 23 from 21.

The Government has introduced “aggressive” measures to try to entice women back to work. For example, women who are over 40 years who have not worked for five years will be able to earn up to the minimum wage without affecting the tax paid by their spouse.

A number of tweaks have also been made to the tax paid by part-timers with the threshold being raised to €10,000 from €7,000, and to €12,000 for those whose part-time work is done on a self-employed basis.