The government’s tax reform plans will boost household spending power by hundreds of euros a year, broadcaster Nos reports.

A household with one or two adults in work will have an average of €800 more a year to spend, Nos says. The measures were presented to opposition parties on Tuesday night.

In total, the government plans to cut taxes and premiums by €5bn, with or without the agreement of opposition parties.

This will be done by making changes to the tax free allowances and reducing the middle income tax band from 42% to 40%. The 52% tax rate will not kick in until €65,000, compared with €57,500 at present.

Stages

The second stage of the reforms, which will require agreement from coalition parties to ensure it passes through the upper house of parliament, involves increasing the 6% value-added tax (btw) rate to the higher rate of 21% on some products and services.

Small firms and retailers have already condemned this proposal.

The third stage, which still has to be worked out in detail, will involve giving local authorities more tax raising powers in return for further cuts in national taxes.