The Irish Fiscal Advisory Council (Ifac) is warning that Ireland faces major spending pressures from an ageing population and climate change.
A new report - 'Boston or Berlin? How does Ireland's tax and spending compare?' - states that Ireland looks like a low tax, low spend country relative to other high-income European countries.
But it says this is mainly due to Ireland's "relatively young population and strong economic growth".
A younger population means the government currently spends less on pensions and healthcare than it otherwise would.
It says that as Ireland’s population ages, spending in these areas is expected to rise.
This demographic shift will gradually bring Ireland’s government spending more in line with levels seen in other European countries.
One area it highlights where Ireland is already a relatively high spender is healthcare.
It says that as the population ages, this is likely to rise further, which would make Ireland even more of an outlier.
The report states that Ireland collects a lower level of government revenue than most other high-income European countries.
"This mostly driven by social insurance paid both by employees and employers," explained Niall Conroy, author of the report.
"When exceptional corporation tax is excluded, government revenue in Ireland is €4,700 per person lower than the European average," he added.
At the same time, Ireland collects a high level of corporation tax.
This is partly because many highly profitable multinational companies have a strong presence in Ireland.
Speaking on RTÉ's News at One, Mr Conroy said if people want the Government to provide more services, "those would naturally have to be paid for via higher levels of taxation".
He said the two savings funds the Government has set up is a "really welcome step" and will help to save some of the "exceptional" current levels of corporation tax, which can be used to "offset" some of the ageing costs coming in the decades ahead.
Mr Conroy said Ifac calculates this will offset between "a quarter and a half" of the costs of an ageing population.
He said Ifac has previously said the Government should save all of what it calls "windfall or exceptional" corporation taxes rather than the €6bn it is currently saving.
"The more ambitious you are now, the less tax rises you're going to have in the future, or the less spending cuts you're going to have to find in order address this ageing problem we have," h
In conclusion the report notes that recently introduced savings funds are a step in the right direction, but won't cover all future spending pressures and additional revenue will need to be raised or spending reallocated.
It advises the more the government sets aside today, the smaller the fiscal adjustments required in the decades to come.
