Fine Gael ministers have issued a fierce defence of Leo Varadkar's plan for a new 30% tax rate in the wake of some in Fianna Fáil dismissing it as "a stunt".
The plan has led to a substantial Cabinet rift as Fine Gael claim it will save the squeezed middle €1,000 a year while Fianna Fáil described it as a "slogan".
A Tax Strategy Group study found one million taxpayers could be around €1,000 a year better off under the proposed changes. The Tánaiste is determined to ensure that tax cuts are a central feature of Budget 2023.
One Fianna Fáil minister said: "Tax reform is needed, absolutely, but there are more ways to skin that cat than a Leo 30% tax rate."
Fianna Fáil's Barry Cowen warned: "This Government's tax policy is pre-determined by provisions of the Programme for Government as agreed by the three parties.
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"Matters outside of that are internal policy matters for respective parties as they prepare policy platforms for next elections."
One Fine Gael minister warned: "Leo wants to start his premiership on the front foot and major tax reform is going to be his and Fine Gael's selling point. We want the squeezed middle back.
"They're ours, not Sinn Féin's. We're not loaning out votes."
In a blistering attack on Fianna Fáil, one minister said: "They don't know it yet, but we have Fianna Fáil over a barrel. The boss is a maestro at this game.
"He is a big ideas man. If Fianna Fáil turn us down then they're against a grand a head for the working man and woman.
"The reason Fianna Fáil are up in arms is we are simply doing to Fianna Fáil what they did to us with McCreevy when we offered tax band change in 1997 and they offered tax cuts. Guess who won the election."
The minister also had a stark warning for Finance Minister Paschal Donohoe, noting: "Paschal would want to watch his step.
"He is in danger of being caught offside. With Leo coming in as taoiseach, he would want to get with the plan fast."
In common with former ministers Eoghan Murphy, John Paul Phelan and Michael D'Arcy, Mr Donohoe was one of the key architects behind Mr Varadkar's leadership victory in 2017.
But the apparent lack of enthusiasm by Mr Donohoe for his leader's tax band plan is generating serious unease within the Tánaiste's inner court.
The source said: "This is the ultimate power game. Who is the boss? Is it Paschal, is it Leo? We will find out soon enough."
One frustrated Fine Gael minister noted: "This is typical Paschal. The UK are predicting a recession at the end of the year, but they are responding. They are spending. Paschal is dithering. He needs a rocket under him."
The Tax Strategy Group (TSG) study found that one million taxpayers would benefit by €1,000 a year if a third 30% rate was introduced on income of between €36,800 and €46,800 a year.
The €945million cost of the proposal would require a doubling of the current €1.05billion tax package were it to accompany proposed reforms of the tax bands.
However, it comes against a backdrop where the TSG notes that between 2011 and 2021: "The number of taxpayers paying tax at the higher rate has increased significantly by six percentage points from 17% to 23% of the tax base."
Creating a third 30% tax rate between €36,800 - the current cutoff point where the 40% tax rate kicks in - and €40,000 would cost a modest €355million in a year.
However, the costs of such a move start to escalate sharply once you move towards and beyond the current average industrial wage for 2022 of €44,202.
A new 30% rate between €36,800 and €50,000 cut off would cost the Exchequer €1.175billion. Increasing the higher threshold to €60,000 means the third tax rate would cost €1.72billion.
The billions flowing into the Exchequer and the cost-of-living crisis has already forced the Finance Minister to change his plans on tax.
However, top level Fine Gael sources warned: "Paschal may have to change that message again if he wants to stay." One senior Fine Gael source added: "Paschal and Leo did have a special relationship but so did Bertie and Charlie McCreevy.
"Finance ministers are dispensable. They can outlive their usefulness - as a lot of former close allies of Leo have discovered."
The source was referring to the decision by the then taoiseach Bertie Ahern to send Mr McCreevy to Europe when, after an alliance of a decade, their positioning on the economy diverged in 2004.
Mr Donohoe is also fighting on a second fiscal front as ministers prepare a wish list of proposals as part of a separate emergency package to the main package of tax and spending.
Up to this week, he and the Department had claimed there would be no extra spending on top of the original €6.7billion tax and package spend. But in another U-turn, Public Expenditure Minister Michael McGrath is expected to have up to €1billion to spend on special cost-of-living measures.
These are expected to include a bonus child-benefit payment, a bonus social welfare payment, a significant cut in capitation fees and a second energy credit.
One Fine Gael source warned: "Poor Paschal's head is spinning with all the U-turns. Nearby corporate job fields are looking ever greener."
Government sources warned: "Forget a quiet August. There will be a frantic bidding war between ministers as they try to scoop up the last of the available cash in McGrath's budgetary package."
One source warned: "This really is the last of the cash. Paschal is already having conniptions at having to spend more than the €6.7billion in the original plan."
Departments have a month to refer their bids to Mr McGrath, but one minister warned: "It would be advisable for people to get in early. The bidding process has begun. Civil servants who are normally dozing by the pool in their French villas have been summoned in."
One source said: "It will be a dash for the cash. Ministers will make or break their reputations on what happens in this month."
The Government has yet to release a figure in terms of how much cash will be available. One minister warned: "It will have to be a billion and beyond before you start talking serious money. Half a billion won't even do energy and the welfare bonus."
