Taoiseach Brian Cowen and Fine Gael leader Enda Kenny today clashed over the issue of taxes ahead of expected changes to the tax system in Tuesday's supplementary Budget.
Speaking in Prague where he is attending the EU-US summit, Mr Cowen said that Ireland's tax system needed to be overhauled to reflect the changing economic realities.
He was responding to comments made by Enda Kenny in his keynote speech to delegates at the Fine Gael ard fheis in Dublin last night at which he said if elected the party would fix the public finances within three years without raising existing income tax rates.
However, the Taoiseach was quick to dismiss the idea that the economy can be kick-started without taxes being raised.
"Basically we need to redesign our tax system to meet the new requirements of our day. There are parts of our tax system which will not return to the level of revenues we saw in the past even with growth in the future," said Mr Cowen.
"The deterioration of the public finance position means we have to take some strong actions including on the revenue side and any suggestions to the contrary are simply trying to cod people," he added.
Mr Kenny, who is to appear on RTÉ's The Week in Politicsshow tonight to discuss the party's position on taxation, said last last night that Ireland can emerge successfully from the recession within five years if the crisis is used as an opportunity fundamentally to reform Irish public life.
Speaking to the party’s 75th ardfheis at the Citywest Hotel in Dublin, he said a Fine Gael plan would create 100,000 new jobs by the end of 2013 and bring the public finances back to health by 2012 – without increasing the standard and current top rates of income tax.
Mr Kenny claimed Fine Gael would cut waste and reduce bureaucracy, but it would not raise the existing taxation rates – though it would impose levies on those earning over €100,000: “Let me be straight - no country has ever taxed its way back to recovery," he said.
“The problem with the public finances cannot be fixed by tax increases and crude spending cuts alone. As more and more people lose their jobs, the hole in the public finances gets bigger and bigger," he added.