The Government has said it sees reducing the 52% marginal tax rate on income as its next priority, according to Taoiseach Enda Kenny.

Speaking at an event held by business group Ibec, Mr Kenny said the Government had agreed to lessen the tax burden on the incomes of low and middle income earners.

He said he saw the 52% rate, which includes income tax, PRSI and the Universal Social Charge, as "anti-enterprise, anti-investment and anti-jobs".

"It is damaging not alone our businesses, our workers and their families and their lives; it is equally damaging to our country's attractiveness as a location for foreign investors," Mr Kenny said.

He added that the rate was also acting as a disincentive to emigrants thinking of returning to the country as the economic recovery gets under way.

Mr Kenny's comments came after the Minister for Finance Michael Noonan again upgraded growth forecasts for the year on the back of better-than-expected GDP figures in the second quarter.

Mr Noonan said the economy could now grow by as much as 4.5% in 2014 – up from the 3% forecast he made last week and the 2.4% estimate given in April.

The figures mean that the Government is now expecting to get the deficit below 3% of GDP without having to undertake any further cuts or tax increases in Budget 2015.

Speaking on RTÉ's Six One News yesterday, Mr Noonan also indicated changes in the income tax system to make it more attractive to workers.

He particularly pointed to a more favourable system in place in Britain, where a large number of Irish people had moved in recent years in order to find work.