The European Commissioner for Economic and Monetary Affairs, Olli Rehn, has said that 'it is a fact of life' that Ireland will no longer be a low tax economy over the next ten years 'after what has happened'.

He was responding to a question at the informal meeting of finance ministers in Brussels on whether or not Ireland's low rate of corporation tax should be included in any moves to increase tax revenues in Ireland in order to bring the deficit down to 3% by 2013.

The Commissioner said he did not want to take any precise stand on the matter since it was a matter for the Irish Government.

But he 'didn't rule out any option' since we know that 'Ireland in the coming decade will not be a low tax country, but it will rather become a normal tax country in the European context.'

The American Chamber of Commerce in Ireland, which represents US multi-national companies here, said the Taoiseach must 'categorically' rule out any increase in Ireland's corporation tax rates.

'At a time when the economy is in deep recession, nothing which would impact on the continued investment in Ireland by our existing base of multinationals, or would deter new investment in Ireland can be countenanced,' said the organisation's president Lionel Alexander.

He also urged the Government to advise European commissioners not to make 'unhelpful comments of this nature'.

Tax base can be expanded - McCarthy

UCD economist Colm McCarthy has said the Government will have to look at expenditure cuts and raising revenue over the coming years as part of its fiscal planning.

He told RTÉ today that the Government could expand the tax base by including water and residential property taxes. He added that there are quite a few things in his Bord Snip report that could be revisited.

He also suggested that large capital projects such as Metro North may have to be deferred. He warned that if measures are not now taken to reassure international financial markets, the country will pay over the odds for borrowing and could end up getting assistance from the International Monetary Fund or the European Financial Stability Facility.

Asked whether tough fiscal adjustment will depress the Irish economy further, the economist said that ongoing uncertainty inhibits business confidence and investment but clarity has a stimulatory effect.

Reaction seems to be positive - NTMA

Meanwhile, the National Treasury Management Agency has said the initial reaction from markets to the expected final cost of the bank bail-out - and the Government's commitment to stricter annual budgets over the next four years - appears positive.

Oliver Whelan, the director of funding and debt management at the NTMA, said the Government's announcement of a four-year budgetary plan to stabilise the national finances had provided clarity for international investors.

The rate demanded by investors to lend money to Ireland for 10 years was 6.608% this evening, compared with around 6.75% yesterday.