Business lobby group Ibec said today workers earning minimum wage should be taxed in order to help boost the public finances.
In its pre-budget submission, the group said everyone must contribute to help pull the country out of recession.
Director general Danny McCoy said the Government did not have the luxury of excluding certain earners from the tax net. "The entire labour force has to make a contribution to this," Mr McCoy said.
Those on the €8.65 minimum wage are currently excluded from the tax net. At present, a single person starts paying tax at €18,300 a year.
The group also called on the Government to limit tax increases in the upcoming budget to €600 million and to focus on cuts from current expenditure.
"To ensure growth and jobs in a four year plan, the total additional adjustment is best spread over the period. The McCarthy report identifies where significant savings can be made," said Mr McCoy.
Ibec says €500 million could be raised by lowering the level of tax credits by 6 per cent so that more people pay tax. It is also calling for the introduction of a property tax, which could raise about €1 billion annually, and the doubling of the tax on second homes which would raise an additional €80 million.
Mr McCoy said that while Ibec's 7,500 members had largely made the changes to "ensure their businesses are sustainable and ready for growth", consumer confidence is stalling recovery of the domestic economy.
He said the setting of four year budget targets could break the "vicious circle" whereby "people are saving too much, leading to job cuts and worsening public finances."
Ibec believes €3-4 billion of private savings could be unlocked to boost domestic demand if consumers had more certainty about the future.
"To date the adjustment has been split 50/50 between tax raising and spending reductions," said Fergal O'Brien, senior economist with Ibec. "We think that's been excessive on the tax side and more damaging on the economy than if it had focused on expenditure."
Mr O'Brien suggested the cost of the banking bailout will be manageable. The gross debt level of Ireland will be in the range of 110-115 per cent in 2015, when the US is predicted to be at 110 per cent, Italy at 125 per cent and the euro as a while at 95 per cent.
Ibec is predicting that while Irish economic growth will be nil this year, GDP will grow by 2.5 per cent in 2011.
Additional reporting by PA