The Minister for Jobs, Enterprise and Innovation Richard Bruton has said that higher rates of income tax that hit people at a very low rate of income are a hindrance to investment.

The Sunday Times had reported that the Taoiseach is pressing for a 1% cut in the top tax rate that would bring the 41% income tax rate down to 40%.

Speaking on RTÉ's The Week in Politics he warned that we cannot allow a rush of blood to the head to make a decision that we cannot afford.

The measure would cost €200m to the Exchequer.

It is reportedly favoured by the Taoiseach over Minister for Finance Michael Noonan's option of raising the income threshold.

Sinn Féin's Peadar Tóibín said that there needs to be a complete reform of the taxation in Ireland.

He cited ESRI reports that have labelled recent budgets as "regressive budgets".

Mr Tóibín said we need to re-order the tax system system.

Fianna Fáil's Seán Fleming said that whatever funding is available to the Government should be spent 50:50 between taxation and spending.

He claimed that we have not had an honest budget this year as the overruns in the health budget have shown.