The European Commission's latest post-surveillance report on Ireland suggests that the USC should be maintained.
The report, seen by RTÉ News, also says the commission will assess Ireland's compliance with the EU water framework directive after new legislation is adopted
The report is the commission's seventh post-surveillance review and covers Spring 2017.
On the tax side, it suggests a broadening of the tax base and a shift towards more sustainable sources of revenue.
It says recently adopted measures may have narrowed the tax base, including the help to buy scheme.
But the commission states that measures to broaden the tax base include maintaining the USC, and increasing property tax, could meet political resistance.
However, it says the USC has provided a very substantial and stable revenue and removing it has a cost.
It also suggests Ireland may not fully comply with the EU fiscal rules this year.
It also says that uncertainty about the funding of Irish water's functions persists and it will assess the Ireland's compliance with EU water framework directive after new legislation is adopted.
The legislation due shortly will underpin an all-party Oireachtas committee recommendation on water funding which provides for charges in relation to excessive usage.
On housing, the report notes that residential property prices have increased recently and states they will need to be closely monitored.
It says it is too early to say if the help-to-buy scheme has accelerated prices but the big issue is supply.
It also reiterates that rent control measures in other countries have been counterproductive.