The Tánaiste and Progressive Democrat leader, Michael McDowell, has said he was prepared to do a coalition deal with any ideologically compatible party.
Speaking on RTÉ Radio's This Week, he said such a party could include Fine Gael, but only if they so wanted it.
Mr McDowell said he was into conviction politics and not auction politics.
He said the tax reform proposals announced today by the PDs are designed to bring a single person earning up to €50,000 out of the top rate.
He said the PDs would expand the 20% rate much further than the rate of inflation.
Taoiseach Bertie Ahern would not comment on the PDs' proposal for tax reform but he said the Government had been working at all times to lower taxation and to generate employment.
The Minister for Agriculture and Food, Mary Coughlan, has said that Fianna Fail will be basing its tax proposals on a balanced approach, rewarding work and supporting those who were less well off.
She told RTÉ's The Week in Politics that the party would be launching its manifesto at its Ard Fheis in five weeks' time.
The PDs, meanwhile, plan to abolish stamp duty for first-time buyers and reduce the impact of the measure for all owner-occupiers.
Announcing the proposal earlier, Mr McDowell denied it represented auction politics, insisting that his party had always favoured reducing the tax burden on individuals.
He said first-time buyers would not have to pay stamp duty and for others, higher rates would only be payable on the amount above the previous stamp duty band.
SSIA-type pension scheme proposed
The cost of the changes would be €350 million and only owner-occupiers would benefit.
The PDs are also proposing an SSIA-type pension incentive account to encourage low-to-middle earners to save.
The state would contribute €1 for every €2 saved, but Mr McDowell said details of this scheme, such as the tax rate that might apply to savings, had yet to be worked out.
The move on stamp duty is part of a tax proposal which also includes a measure announced last night to cut the standard and higher tax rates to 18% and 38% respectively during the lifetime of the next government.
The tax cut proposal was announced by Mr McDowell in his speech to the PD conference in Wexford, in which he also warned voters against electing a weak, divided and inexperienced government.
It was his first conference speech as party leader.
He said the party had been working on the plans for months, and they were fully costed and achievable in the lifetime of the next government.
And, in a clear reference to Labour leader Pat Rabbitte's tax cut plan, he said the PDs were not 'Johnny Come Latelys' to tax reform.
Dealing with the forthcoming General Election, he warned that Ireland could sleep walk into a slump if it elected a Dáil with no clear mandate for prosperity, that international investment would be endangered if a weak and fragmented government were to emerge from the Election.
And he also criticised Sinn Féin, saying the PDs had stopped them entering the political mainstream while still engaged in organised crime, and telling those who wanted an each-way bet on democratic politics and organised crime: 'We haven't gone away you know.'
