Mr Noonan surprised his Cabinet colleagues by outlining details of his intentions in relation to tax policies, two weeks out from budget day.
Mr Noonan said it would be difficult to avoid giving more USC relief to higher earners as they have endured the most burden by way of the emergency tax, one source has revealed.
“He said it would be tricky to give more back to lower income earners when they were not affected by USC that much in the first place. Without meaning to sound regressive, he said it will be difficult to avoid cutting USC and [thus] giving more to higher earners,” the source said.
Mr Noonan also outlined his plans to increase inheritance tax thresholds at a meeting of the Cabinet yesterday, as well as signalling moves to help landlords.
The Government has committed to about €1bn in additional extra spending in the budget for 2017, which will be split on a 2:1 basis between spending increases and tax cuts. The Irish Examiner understands Mr Noonan told his colleagues that he will increase the threshold at which people begin paying the USC from just under €13,000 to close to €17,000.
Mr Noonan said he is likely to reduce the lowest two USC rates by half a point each — from 1% and 3% to 0.5% and 2.5% respectively.
The veteran minister is also likely to increase the point at which inheritance tax will begin to be charged.
However, sources have said Mr Noonan does not believe he can cut the 33% rate at which the tax is applied.
As part of a means of bridging the gap in the rate at which PAYE workers and the self-employed people are taxed, PRSI tax credits for those who work for themselves are also to be extended.
Some have suggested that the “earned income tax credit” of €550 which was announced last year is likely to be doubled come budget day.
Public Expenditure Minister Paschal Donohoe also called on his fellow ministers to temper their expectations and said he expected their final submissions no later than Friday.