Progressive Democrats deputy leader Liz O'Donnell has said she is "hopeful" of a cut in the top rate of tax from 42 per cent to 40 per cent in the Budget next month.
In an interview with TV3 yesterday evening she said tax cuts were "always on the agenda with the Progressive Democrats in government".
"I would be very hopeful that there would be tax cuts in this Budget because . . . it is in our programme for government," she said on the Political Party programme.
A cut in the top rate of tax from 42 per cent to 40 per cent is contained in the Programme for Government.
"That was in our Programme for Government and we are always working to achieve the individual aspects of our Programme for Government with Fianna Fáil," Ms O'Donnell said.
She said that such a cut "may well happen".
Such a cut is seen within Fianna Fáil as highly unlikely, however, as it would be of primary benefit to high earners.
Minister for Finance Brian Cowen is believed to oppose such a cut as it would limit the possibility of targeting tax reductions at lower income earners.
The Irish Times understands that any tax cuts in next month's Budget will focus on widening the tax bands.
Ms O'Donnell also rejected claims that the Progressive Democrats' calls for a reform of stamp duty on homes had contributed to a slow-down in the property market as buyers waited to see whether there would be a reduction in the Budget.
"I don't accept that, I think that more relevant is the fact that there has been five increases in interest rates over the last year and there has been a slowing down of the market, it may well be that supply is coming closer to demand," she said.
"We see the need for the reform in that area but to be fair to our partners in Government, we did not put this in our Programme for Government.
"It remains to be seen whether there's scope for doing it in this year's Budget but it will certainly be coming in our electoral manifesto and that's where this debate started," the PD deputy leader said.