The Dáil will tomorrow begin debating a Fine Gael bill calling for a cut in the rate of VAT.
Fine Gael is calling on the Government to cut the 13.5 per cent rate by 1 per cent, arguing that such a move would improve competitiveness, bring down inflation and help reduce poverty.
The bill suggests the Government can recoup the Exchequer shortfall by placing a levy on electricity-generating companies who will benefit from new carbon allowances up to 2012.
The motion says: "The electricity-generating companies in Ireland will make unearned windfall gains of approximately €1.6 billion based on an average cost of carbon of 25 euro per tonne, in the years 2008 to 2012.
"This arises from the free allocation of carbon allowances by the Government and the requirement by the electricity regulator to include the cost of carbon in electricity pricing."
The motion will face a Dáil vote on Thursday.