The Irish Congress of Trade Unions (Ictu) has urged the Government to devote twice as much money to improving public services than it allocates for tax cuts.

Ictu general secretary Patricia King told the national economic dialogue in Dublin Castle that rather than a 50:50 divide between spending and tax reductions, the ratio should be 2:1.

She said that a further €650 million could be raised by additional adjustments on the tax side including reforms of employer PRSI.

She urged greater expenditure on childcare and on closing the gap between the amounts older people would have received in pensions if the retirement age had not been raised and that available under the jobseeker payment scheme which they have to rely now until they can receive the old-age pension.

She also called for a 1.5 per cent rise in welfare benefit rates to keep them in line with inflation.

Ms King also recommended greater expenditure on capital projects.

The employer’s group Ibec warned the Government against repeating previous mistakes of “hollowing out the tax base” by exempting too many people .

Ibec director general Danny McCoy said while plans to remove 500,000 people from the scope of universal social charge “may be good and noble in itself”, it meant that the tax base was being limited once again to a relatively small number of people.

He said the Government’s plans for increasing spending by €1.2 - €1.5 billion was a relatively modest envelope of money in the context of the projected growth in the economy and it was facile for people to argue that the Coalition was seeking to use this funding to buy the forthcoming general election.

He called on the Government to increase spending on infrastructure to 4 per cent of GDP.

Tom Parlon of the Construction Industry Federation said the population was set to grow by 600,000 by 2031 ahead and also urged the Government to spend more on infrastructure. He also called for new measures to encourage young people to take up trades and apprenticeships .

Fr Sean Healy of Social justice Ireland said the Government’s proposal to split available resources on a 50:50 basis,between tax cuts and investment in services, was “profoundly unfair”.

“As a ratio of 2:1 was applied when imposing austerity, surely the very minimum that would be expected would be that this ratio should also be used when resources become available.”

Eamon Ryan of the Green Party opposed tax cuts and urged greater expenditure on public services including education and health.

The chairman of the business group ISME James Coghlan said the Budget priority should be to make it worthwhile to work. He said “people must view working as a profitable activity”.

Irish National Organisation of the Unemployed head of policy John Stewart said his organisation was “ very strongly arguing” that even a 6 or 7 per cent unemployment rate did not constitute full employment.

Earlier, David Duffy of the ESRI said he expected the unemployment rate to drop “as low as eight per cent” by the end of 2016.

Mr Stewart said full employment would involve an unemployment rate of approximately 4.1 per cent and a situation where “anybody who wants a job can get a job”.

The chairman of the Small Firms Association AJ Noonan, said tax reform was key to unlocking job creation, investment and growth.

“”The first step is to end the discriminatory treatment of proprietary directors and the self-employed in the tax system. At the moment they are subject to a universal social charge surcharge and don’t receive any PAYE tax credit, even where they pay tax on a PAYE basis. The upshot is that they pay more tax than they would as an employee on the same salary - so they are being punished for taking the risk of starting their own business and creating jobs.”

Sean Fleming of Fianna Fail questioned whether the Government projections for the Budget would remain in place given that last year its position had moved from a proposed €2 billion cut in spending to a €1 billion increase.

Sinn Féin leader Gerry Adams said the Government had “refused to do anything tactical to alleviate the plight of those in mortgage distress”.

“At the same time, special legislation is being rammed through the Dáil to allow the Government pickpocket the incomes of citizens to pay for the water charges,” he said.

Mr Adams added he wanted to know whether the Government would “abolish water charges, the property tax, and reform the universal social charge”.