Labour will propose a third tax rate for higher earners in a pre-Budget statement next week, leader Eamon Gilmore told the party's 64th national conference in Mullingar last night.
Labour had a plan to deal with the problems in the economy but Mr Gilmore stressed there was "no quick fix" and measures were required that would not normally be contemplated.
But he added that, "This is not Armageddon, and we need not panic." The Irish people were "resilient and creative" and would not be defeated by "the mistakes of the past or the greed of the few."
The party had offered to "fully engage" with the budget process but the Government had been "evasive and partisan" about the proposals it intended to bring forward on April 7th.
"We need a budget that is part of a coherent three-year National Recovery Plan. You cannot close the gap between income and expenditure in one year alone."
"Too much harsh medicine all at once could end up killing the patient. Sending the country further into a downward spiral of job-losses, followed by cuts, followed by more job- losses, followed by more cuts."
"Do taxes have to increase? Yes, they do. They are increasing already and are going to have to increase more. Nobody likes that, but there is no choice - that is where Fianna Fáil has brought us. The gap cannot be sustained."
"We will publish our pre-budget statement next week, and our tax proposals will include a third rate of income tax for the highest earners," he said.
But the Government must end the "practice and status" of tax exiles. "That game is up now. If working people have to pay more tax, then everybody is paying tax."
He continued: "There has to be sacrifice, yes, but terms and conditions apply. The time has come for fundamental reform. Twice in a generation, Fianna Fáil has brought this country to the edge of disaster. Twice too often. It is now time to say 'Never again'."
In order to end "crony capitalism" it was necessary to end "crony politics." He said the best way to do this was for people to vote Labour in the local and European elections on June 5th.
On the second Lisbon referendum he said: "The European Union needs to be able to make decisions quickly and respond nimbly to rapidly changing new world conditions.
"That's why the reforms in the Lisbon Treaty are so important. Why the Labour Party was so right to back it, and why we will do so again, if the Government brings forward new proposals which are to our satisfaction."
Earlier, Mr Gilmore received a boost when an overwhelming majority voted to adopt a report proposing a new party constitution which will give greater power to head office in the choice of election candidates, bringing in a new administrative structure and redefining the relationship with the trade unions.