A hike in the excise duty on diesel to equalise it with petrol could form part of discussions ahead of the budget.
The excise on petrol is currently 22% - or 11 cent - higher on petrol than it is on diesel.
The Government Tax Strategy Group's report says Minister for Transport Shane Ross has requested the equalisation of the rates for climate policy reasons.
The group's climate change policy paper, which was published last month, says it would be prudent to make this change over five years.
This would minimise the impact on competitiveness for businesses, who are among main users of diesel, the group believes.
It says too that the five year changeover period would give drivers an incentive to switch to natural gas fuel.
The change could yield the exchequer almost €328 million over five years.
A Department of Finance spokesperson this evening said the proposal was one of many that could be discussed by the Oireachtas Budget Committee in the coming weeks.
Ultimately though the final decision will rest with the Minister for Finance Michael Noonan.
Independent TD Michael Healy-Rae called on Mr Noonan to reject the proposal.
"This would place an enormous burden on people using diesel, dramatically increase the cost of living and would have an extremely negative impact in our country," the TD said.
Another Independent TD, Michael Fitzmaurice, has described the proposal as outrageous.
The Roscommon-Galway TD said it would cost thousands of jobs and would see the price of diesel rise by 12 to 15 cent a litre.
The TD, who is a former member of Mr Ross's Independent Alliance, urged the minister to abandon the proposal.
"It's all right for Minister Shane Ross to make this proposal because he has a couple of miles to drive into work every day but clearly he is not aware of the implications that this proposal will have for so many people and businesses throughout the country," he said.
