MIDDLE income earners can expect further income tax cuts next year and again in 2017 if Fine Gael are re-elected, according to Taoiseach Enda Kenny.
But the Government looks set to continue with its approach of penalising those on incomes above €70,000 through additional hikes in the Universal Social Charge (USC).
Mr Kenny yesterday gave a clear indication that his party's tax strategy will see cuts to the income tax rate being introduced in tandem with new USC charges for high earners.
"We now have a formula for targeting tax rate reductions at low- and middle-income earners without giving disproportionate benefits to those on the highest incomes," the Taoiseach told the Dail.
One of the most significant measures announced in this week's budget was the cut in the higher rate of income tax from 41pc to 40pc.
Mr Kenny said the marginal rate, which is higher as it reflects the level of income tax, Universial Social charge and PRSI, will fall to a maximum of 50pc after Budget 2016.
"The tax rate on middle income families will be lowered further in Budget 2016 - to at most 50pc - while ensuring those on higher incomes continue to pay their fair share," the Taoiseach said.
"If the Government is re-elected, we will deliver a further rate reduction in the 2017 budget.
"All taxpayers will be better off after this budget, and the reductions we have delivered to the Universal Social Charge are designed to make sure that work pays for those on lower income."
The remarks by Mr Kenny are being viewed by backbenchers as reflecting his overall plan to cut the higher tax rate to 39pc next year.
But his pledge to introduce a further suite of tax cuts next year and again in 2017 sparked accusations of electioneering by the Opposition.
"The Taoiseach's comments confirm our suspicion that we have just had an election budget and the Government clearly see this week as the start of an election campaign," Fianna Fail's Michael McGrath told the Herald.
"We all hope the economy continues to improve and there will be scope to reduce the income tax burden, but the Government is putting electoral gain ahead of economic considerations," he added.
Separately yesterday, junior finance minister Simon Harris accused members of the Opposition of creating the impression that the Budget will not benefit lower paid workers.
"The Opposition is struggling to come up with credible criticisms of a budget which will have the effect of putting more money in everyone's pockets," Mr Harris said.