Finance Minister Michael Noonan has said that he intends to propose that the top rate of VAT be increased by two percentage points from 21% to 23% in the Budget.
Speaking on RTÉ's News at One, Mr Noonan said the Government had not seen or signed off yet on his Budget proposals.
He described as disappointing the leaking of what he called confidential preliminary documents, which the Government had supplied to the EU/IMF/ECB troika, and which he said conveyed what the Government might do.
He said he would not increase income tax in the budget, and favoured the VAT increase instead, because it would have less impact on jobs.
Employers' group IBEC said a planned two-point increase in VAT in the Budget would hit consumer spending, delay the recovery and be a further blow to an already fragile domestic economy.
"Increasing VAT at a time when the domestic economy remains on its knees is at odds with the economic needs of the country," said the group's chief economist Fergal O'Brien.
Earlier, the European Commission said the issuing of a confidential document on Irish budgetary policy to a German parliamentary committee was "the sole responsibility of the German authorities".
The Commission's Representation in Ireland said the documents were not final and had not been signed by the Irish Government.
It said the Commission, as a member of the troika, was obliged to report to member states on the contents of the quarterly review so they can approve the next tranche of financial assistance - in the same way that the Irish Government receives information about Greece.
The statement adds that in Germany, there is a legal obligation to share this information with the Bundestag budget committee, which has a "central role in deciding on these disbursements".
