EU demands for changes in the corporation tax regime and discussion on the future of Irish broadcasting will dominate the agenda at today's all-day Cabinet meeting.
The low-tax regime has been a key part in the State's success in attracting investment, but the strategy has caused resentment in other EU states.
The meeting comes as the Government attempts to finalise with the European Commission a timeframe for changes in the tax regime. The key issue is how companies already negotiating to locate in Ireland should be treated.
The Commission wants to prevent a rush of new companies seeking to avail of the Irish tax breaks. But a compromise under which those already "in the pipeline" would enjoy the 10 per cent rate until 2003 is thought likely. An agreement is expected within weeks.
The deal with the Commission is expected to see the general rate of corporation tax reduced from 32 to 12.5 per cent by the year 2003, allowing an annual cut of four per cent in each of the five budgets in the interim.
Under the terms of the likely agreement, companies already benefiting from the special 10 per cent rate of tax will keep their benefits - until 2010 in the case of exporters and 2005 in the case of companies in the IFSC.
The Cabinet will also discuss the expected cuts in personal income tax in the December budget.
A Government spokesman said the Cabinet was "conscious of the fact that social partnership is under strain" on a number of fronts. But he said that the Tanaiste's speech in Cork last Friday illustrated the consensus that exists in Cabinet on the need for cuts in personal income tax in this year's Budget to target the lower-paid.
In that speech Ms Harney said the Exchequer figures allowed for "radical" tax reform which, together with welfare reform and a national minimum wage, could be used to tackle both unemployment and labour shortages in some areas of the economy.
According to the spokesman, her comments on tax were in keeping with earlier public statements from both the Taoiseach, Mr Ahern, and the Minister for Arts, Heritage, Gaeltacht and the Islands, Ms de Valera.
Other issues affecting the Budget, including inflation and the expected reductions in interest rates before the start of European Monetary Union, are also likely to be discussed today.
Ms de Valera will make a presentation to the meeting on broadcasting, particularly the challenge posed by the move to digital technology. The influence of TV3 and demands for an extra £3 million funding for Teilifis na Gaeilge are expected to feature too.
The meeting will also consider legislation to be brought before the new Dail session in the autumn, with a view to establishing Government priorities.
The picketing of Defence Force headquarters arising from last week's decision to sell six Army properties is not expected to be raised at today's meeting. It could come up at the Cabinet's weekly meeting on Wednesday.
