Politicians are line in for wage hikes of up to €5,000 before the delayed €5 increase in the old-age pension kicks in.
Budget talks between Fine Gael and Fianna Fáil over when to boost the income of pensioners and other vulnerable people were deadlocked last night.
Sources told the Irish Independent that Fine Gael has now suggested a start date of May, while Fianna Fáil continues to insist that the increase must start in January.
"The entire Budget now hinges on the social protection package," said one source who added that a compromise must be struck today.
The row comes at a time when ministers and TDs are preparing to see their own pay packets increase substantially.
From April 1, members of the Dáil, including the Taoiseach, will see their salaries jump by between €2,700 and almost €5,000.
The deputies are among the public servants earning over €65,000 who will benefit from a clawback of temporary pay cuts that were imposed under the Haddington Road Agreement.
TDs, whose pay is linked directly to principal officers, suffered a €5,414 drop in wages, from €92,672 to €87,258 during the recession.
As a result, they are due €2,707 next year and the same amount the following year.
The Government is already facing a showdown with unions over the rate at which they are getting back the €2bn that was taken from wages during the financial crisis.
However, the restoration to their own pay could not come at a worst time for the senior politicians involved in a dispute over social welfare increases.
A €5 increase in the old-age pension has been well flagged after Fianna Fáil made it a 'red-line issue' as far back as last August.
Social Protection Minister Leo Varadkar last week said that careers, the disabled, the blind, widows, guardians of orphans and people on invalidity and illness benefits should enjoy a similar boost to their income.
The Government does not have the money to give all these categories of people a €5 increase next year unless it delays the start date.
It is understood that Mr Varadkar has said the hike is affordable from June onwards but this is unacceptable to Fianna Fáil.
One source close to the talks told the Irish Independent that resources would have to be found from somewhere else in order to facilitate an earlier introduction.
"It may be a case of changing parameters or revising targets. We need to tweak a few things to find a few more million," the Fine Gael source said.
While the game of hard ball continued last night, sources said the best Fianna Fáil could hope for would be to compromise at March or April.
Meanwhile, a small number of issues still have to be ironed out for the Independent Alliance before they offer full support to the Budget.
It is understood that they have secured extra funding for flood relief works, 10,000 new medical cards for children with disabilities and grant money for sheep farmers.
However, they want further reassurances around the Government's policy on funding for education and a rural renewal scheme.
Other measures to be confirmed by Finance Minister Michael Noonan and Public Expenditure Minister Paschal Donohoe tomorrow include: a cut to the three lowest rates of USC, the extension of the home renovation scheme, a first-time buyers tax rebate worth up to €20,000, a childcare subsidy for low income families and €50m to help relieve hospital waiting lists.
There will also be an increase in tax relief for landlords and a small reduction in Dirt tax.
Cigarettes will go up by at least 30 cent a packet.
The pay rise for politicians is not part of the Budget as it has already been signed off on as part of the Lansdowne Road Agreement.
During the financial crisis, the Taoiseach's pay fell from €200,000 to €185,350, the Tánaiste's from €184,405 to €171,309 and a minister went down from €169,275 to €157,540. From April, the Taoiseach will gain €4,883, the Tánaiste will be up €4,365 and ministers will get €3,911.
This is the first Budget I haven't been directly involved in for five years. This year, there won't be anyone visiting the bookies tomorrow to put down a fiver on what colour tie I'll wear to unveil the Budget.