Tánaiste Joan Burton has denied there is a disagreement between Fine Gael and Labour over tax reform but says the issue has lead to "strong debate and discussion" between the Coalition parties.

Tensions have reportedly risen between the two in recent weeks as to whether or not tax reforms should focus on cutting the Universal Social Charge, which would be of more benefit to lower paid workers, or to cut the higher level of income tax to benefit higher earners.

Ms Burton said the “real case for reform” arises in relation to low- and middle-income earners and creating a tax system that ensured it was “always worth taking a job”.

“I believe that is a view that Fine Gael share,” Ms Burton added.

Taoiseach Enda Kenny is expected to outline this afternoon how Fine Gael plans to approach taxation in the future, with the focus likely to be on reforms for those earning up to €70,000.

Speaking to reporters at the announcement of an initiative to support young unemployed people, the Tánaiste said developments in Budget 2015, where changes to USC rates and entry points as well as a 1 per cent reduction in the higher rate of tax were announced, were “a very good signpost” to the agreement between Fine Gael and Labour on taxation.

She said: “Fine Gael has chosen to emphasise cuts in the top rate of tax” but there was no doubt the USC was “quite severe in its impact particularly for low and middle income people”.

Asked if opposing views on the approach to tax were creating tensions, Ms Burton replied: “I don’t think there is any particular disagreement between the parties.

“It is a very strong debate and discussion between the parties as we want to have progressive tax system that produces the kind of funding that we need in this State for education and health and for all of the social services that are provided publically.

“We need to do that in a way that when we have room for some tax relief it is geared towards low and middle income earners and that was the agreement I made with the Taoiseach in July after my election as Tánaiste.”

Ms Burton said “the emphasis on the reform has to be on improving the situation for relatively low paid people on €34,000 to €35,000 or a couple who enter the top rate at what is a modest level of income. We need to give people like that the maximum relief in order to maintain the progressivity of the system.”

Asked about suggestions the next general election will be battle between Fine Gael and Sinn Féin, Ms Burton replied there was a “huge amount of instability” in recent opinion polls.

"I believe that when people see the tax reforms and USC reforms in their salary statement and wage packets in January and February people will begin to reflect on who is best placed to produce a fair Ireland that's growing jobs, growing employment and getting people back to work and has a fair tax system and a tax system that is fair to people on modest incomes," she said.

An Irish Times/Ipsos MRBI poll last week put Labour on 6 per cent (down three points since the previous poll), Fine Gael on 19 per cent (down five), Sinn Féin on 22 per cent (down two), Fianna Fáil on 21 per cent (up one) and Independents/Others on 32 per cent (up nine).