Taoiseach Brian Cowen says the gap in public finances between revenue and expenditure has to be stabilised.
When asked about the upcoming Budget, the Taoiseach said that example had to be given from the top.
Speaking in Clonmel, Co Tipperary, Mr Cowen said the current tax revenue was at 2003 levels and there was a shortfall of €23bn, which was 'not sustainable'.
He added that if the shortfall was not addressed, everything Ireland had achieved to date would be put at risk.
Last night, Minister for Finance Brian Lenihan warned that Ireland would be on the road to ruin if the Government failed to reduce borrowing and stabilise the national debt.
He said big cuts in ministerial and senior civil servant pay are on the way and warned that the cuts proposed by An Bord Snip Nua would be a picnic compared to what future governments would have to implement.
The minister said if borrowing continued unchecked, then €2 out of every €3 of income tax would go to service a national debt of €160bn by 2013.
Mr Lenihan explained how the top marginal rate of tax now stands at 52% and pushing it higher would turn business away from Ireland.
Beyond a new carbon tax, the Minister said he did not intend to increase taxes in the forthcoming Budget.
Meanwhile, General Secretary of the Irish Congress of Trade Unions David Begg has described as 'brutal and irresponsible' the Government's plans to cut public spending by €4bn.
Mr Begg said the impact of cuts of this magnitude would result in 'crashing the economy.'
Earlier, Minister for the Environment John Gormley said the Government would be introducing spending cuts in every single department in the December budget.
Speaking at a Heritage Council Conference in Tullamore, Co Offaly, Mr Gormley said the Budget would be extremely difficult for everybody.
The Green Party leader also defended the delay in publishing details of his expenses.
Mr Gormley said that he would shortly be publishing the information but it had taken some time to assemble the details for the period of months involved.
He also said he disputed newspaper headlines that suggested he had used a limousine service at airports abroad.
The Minister said the vehicle involved was actually a people carrier that was necessary to bring him and his officials to their destination.
