Tánaiste Leo Varadkar has given the clearest indication yet that the Budget will contain some measures to promote home working.

Already the Department of Enterprise, Trade and Employment has proposed - in the Tax Strategy Group paper - an increase in the amount that can be claimed for heat and electricity.

If the current tax relief limit for heat and electricity was increased from 10% to 30% it would cost in the order of €8.6 million.

This is based on 400,000 people claiming the relief for two days every week over 46 weeks each year.

It is understood there are mixed views in Government about this proposal with some ministers of the opinion that those working from home are already making a saving by not paying commuting costs.

The Tánaiste said remote working is set to be a "big part of the future and important for work-life balance and having more people working in rural Ireland".

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Speaking to reporters in Washington DC, Mr Varadkar said there was some space within the tax package for measures to promote remote working.

He said: "There will be a tax package in the budget of roughly €500 million, most of that will be used to index tax credits and bands making sure that if people do a get a pay increase in the coming year they will be able to keep most of it and not lose most of it to tax and that is important at a time of high inflation.

"What we'd like to do is to have a system whereby if someone is working from home and they incur costs, particularly utility costs, they'd be able to defray that in some way against the tax they pay. That exists already but it hasn't been updated in many years."

The Tánaiste also said that the payment of a pandemic bonus to workers could be "potentially divisive" and that the issue doesn't necessarily have to be resolved by budget day.

Mr Varadkar said the Government wanted to recognise the extraordinary efforts made by people during the pandemic and that they were determined to get it right.

"I think the concern we have had from the outset is that it could be potentially divisive. We think it is right that the extraordinary work done by people is recognised in some way but it isn't straight forward.

"Even within the health service some people worked from home, some staffed Covid wards with inadequate PPE, long before there were vaccines. Others worked in parts of the health service that were wound down.

"I think what we need to do now, on foot of the Labour Court recommendation, is for Government to engage with the representatives of the workers to see what we can do," he said.

Mr Varadkar said that someone on the frontline staffing a Covid ward had put in a "different and greater" effort than someone working from home.

"I think it would be preferable all around that we have it done in this financial year but it is not a requirement that it be a budget day decision," he said.

The Tánaiste is in Washington for a two-day visit focusing on commerce and trade.

Yesterday, he met with the US Secretary of Commerce, took part in a roundtable meeting with the US Chamber of Commerce and delivered an address to the Centre for Strategic and International Studies.

He also met with US Trade Representative Katherine Tai.

According to a statement released by Ambassador Tai's office, she "highlighted the Biden-Harris Administration's support for a strong global minimum tax and explained how this policy could achieve more equitable and inclusive economic growth".

Today, the Tánaiste said that Ambassador Tai had not tried to pressure Ireland into signing up to the global minimum tax agreement.

"She explained the US position and said it was a priority for President Biden but she also gave me an opportunity to explain the Irish position and why we believe that retaining tax sovereignty and having a low and reliable rate is part of our industrial policy and big part of what makes Ireland a successful economy, not the only part but an important part nonetheless," he said.

During their meeting, Ambassador Katherine Tai also reiterated US support for the Good Friday Agreement.

Additional reporting Micheál Lehane