The Minister for Finance has said we need to broaden our tax base.
Winding up the debate on the economy, Brian Lenihan said if savings of €4 billion are to achieved next year, a proportion of it will have to come from taxation.
The Minister reaffirmed the Government's commitment to a 12.5% corporation tax. He said this rate will not change, as it continues to attract investment into the country.
He said the social partners had been informed that whatever taxation measures are to be introduced will ensure that the higher proportion falls on high incomes.
The Minister also pledged to redouble efforts to stabilise the financial system. Mr Lenihan said the bank guarantee scheme would continue for two years, and he said discussions were continuing on recapitalisation of Bank of Ireland and Allied Irish Banks. The Minister said the banks were capitalised above the minimum EU level although the markets still required further confidence.
Mr Lenihan said Anglo Irish Bank is secure and stable and will continue to operate on normal terms. He said the bank's new board will ensure that all debts are fully pursued by the Bank.
The Minister said it was essential that we restore our competitiveness, address the fall-off in revenue and address the need to economise to ensure that Ireland can 'pay its way'. He said action must be taken now and in 2010.
Tánaiste Mary Coughlan encourages competitiveness
Earlier, Tánaiste Mary Coughlan said that Ireland needs to restore relative cost competitiveness if the country is to regain lost ground economically.
Addressing the Dáil during the second day of the debate on the economy, the Tánaiste said addressing competitiveness would be a key task of the cabinet committee on economic renewal.
Mary Coughlan said the country's high energy costs were a factor in our diminished competitiveness. She said that the Government would be looking closely at how energy prices are set into the future.
On the issue of pay, Ms Coughlan said wage inflation was an issue that needed to be addressed. Ireland's wage inflation is 50% above the euro zone average for 2004 to 2008.
National Recovery Plan talks
Meanwhile, talks on a new National Recovery Plan went ahead at Government Buildings this afternoon after all the social partners agreed to accept the Government's Framework Document as a basis for negotiations.
IBEC leader Turlough O'Sullivan said the partnership talks were progressing well.
He said that this afternoon they had concentrated on the enterprise agenda, export credit and assisatance for companies.
He said they had also discussed the devaluation of sterling and the cost of energy.
He said it was no longer tolerable that Ireland has the second highest energy costs in the EU.
Asked if taxation had been discussed or had become a sticking point, he said he would rather not comment on that.
He said he thought IBEC might be back for talks tomorrow and that at this stage he is hopeful the Government's deadline of next Tuesday can be met.
The general secretary of the country's largest public sector union, IMPACT, has warned his members that the Government might impose a 10% pay cut on salaries if the recovery plan can not be agreed over the coming days.
Peter McLoone said that unions have strongly resisted what he called the Government's preferred option of immediately cutting all public service salaries by 10% as part of its effort to reduce public expenditure by €2 billion this year.
However, he fears the Government would impose this solution without agreement if a deal cannot be done soon.
Mr McLoone said that while all the alternative options were unpalatable, the union must work to influence decisions so that those least able bear the smallest burden.
He also said it was important to safeguard the value of pay and pensions into the future.
He said this inevitably meant the union would have to discuss options that would have been entirely out of the question just a few weeks ago.
They could include changes in overtime and premium payments, and significant additional staff contributions to the cost of their pensions.
It is now expected that the talks will continue through the weekend, though it is hoped a deal will be done in time for the next scheduled cabinet meeting on Tuesday.
