MANY of the drastic and potentially hugely controversial measures considered by the cabinet will not form part of Tuesday's mini-budget package, the Sunday Tribune has learned. Finance minister Brian Lenihan is expected to opt for €2bn in tax increases and cuts of €1.5bn – less draconian than had been anticipated.


Because of the enormous difficulties it would cause for company payrolls, income tax rates will remain unchanged. However, the income levies of 1%, 2% and 3% - depending on income – will be temporarily increased, probably doubled, until the rates can be adjusted in December's budget, where the aim is to have a top rate of tax of 48%.


While the budget will still be one of the harshest in the history of the state, the government has pulled back, for now, from cutting social welfare rates, taxing or means testing child benefit and bringing tens of thousands more lower-paid workers into the tax net.


There will be an increase in excise duty on the 'old reliables' of alcohol, cigarettes and petrol, although cigarettes may not be badly hit because of the potential for increased supply of black market merchandise.


Government figures say privately that the days of the same rate of child benefit being paid to every parent regardless of income are over but, as with the introduction of a property tax, this will not happen until the Commission of Taxation has reported later in the year.


However, the early childcare supplement of €1,000 per child under five-and-a-half years is expected to be abolished on Tuesday.


With the budget deficit certain to exceed 9.5% of GDP, the government will be open to accusations that it has not gone far enough in tackling the public finances. However, it will strongly argue that to have gone for more than €3.5bn in extra taxes and cuts risked doing huge damage to the economy. "We don't want to kill the patient," one source said.


As part of his efforts to reassure the international markets about the government's seriousness in tackling the budget crisis, Lenihan will take the unprecedented step of laying out, in considerable detail, spending and revenue plans until 2013. This will involve flagging future moves such as the introduction of a property tax and the taxation or means testing of child benefit payments and outlining the amounts likely to be raised.


A package to restore confidence in the banking sector will also be announced this week, with some of the detail possibly being disclosed on Budget day. This will include the establishment of a special state agency that will take over bad property loans from the banks, effectively buying the loans and the property underlying them, at a much reduced rate.


Lenihan is also likely to announce the extension of the bank guarantee scheme by at least 12 months to allow banks carry out bond issues before the summer.


A package of political cutbacks – including reducing the number of junior ministers to 15, eliminating ministerial pension payments to serving politicians, reducing TD expenses and cutting the number of stipends paid in relation to Oireachtas committees – will also be unveiled.


Although there is no money for a voluntary redundancy scheme, innovative measures to reduce the number of public servants are also still being considered by ministers.


"Serious consideration" is being given to a system whereby civil servants will be paid a sum of money to take a sabbatical for five years.


There is also speculation the government is considering some radical options, including the possibility of small, targeted reduction in VAT and a flat fee of €300,000 a year being levied on tax exiles.


A package of measures to safeguard jobs will also be revealed. Government sourc­es also stressed financing would be available for a new state-of-the-art building for cystic fibrosis patients at St Vincent's hospital in Dublin. They said any slip in the 2010 deadline for the project was because of design, not finance, reasons and there was confidence the facility would be completed in early 2011.