The number of taxpayers paying the higher rate of tax rose by 53,000 in 2003, according to figures released by the Minister for Finance.

Mr McCreevy's response to a parliamentary question by Labour Party finance spokeswoman Ms Joan Burton shows the percentage of taxpayers paying tax at the 42 per cent rate rose to 30.5 per cent in 2003 from 27.89 per cent in 2002.

Ms Burton said this reversed many of the gains made by PAYE workers in 2001 and 2002.

"The reason for this increase is the failure of Minister McCreevy to properly index income tax bands in the last budget and it is indicative of the stealth tax approach adopted by this Government in budget 2003," she said.

Mr McCreevy cut the rate of CGT from 40 per cent to 20 per cent in 1997. In addition, the Revenue's 2002 High Earners report on the top 400 taxpayers showed they benefited from €70 million in various property-based capital allowances, Ms Burton said. A Minister for Finance spokesman said there was nothing new in Deputy Burton's assertion. He said the last budget indication that the nuimbers paying tax at the higher rate would be almost 30 per cent.

He said the Government had reduced the higher and lower rates of direct income tax by more than any other administration.