TAOISEACH Enda Kenny ruled out income tax increases. “In respect of the income tax position, let me be quite clear. The Government will honour its commitment in respect of there being no increase in the income tax bands.”

Mr Kenny said the memorandum of understanding with the EU and IMF had said a comprehensive spending review (CSR) under way would be completed by the end of next September.

“Based on the CSR, and in consultation with the European Commission, the IMF and the ECB, the Government will introduce budgetary changes that will aim to realise fully the efficiencies identified while remaining fiscally neutral,” he added.

“We have no intention of reneging upon the commitment in respect of income tax.’’

Fianna Fáil leader Micheál Martin said that earlier yesterday Commissioner [Olli] Rehn had made it clear he expected Ireland to receive a reduction in interest payments relating to the support loan.

“He all but announced a reduction earlier today and it has been clear since the beginning of the year that this would happen.’’

Mr Kenny said he had noted the comments by Mr Rehn. “This matter has not been finalised as yet, and there have been some expectations in this regard for some time.’’ He said the Government was negotiating on an interest rate cut and was aware of the commissioner’s comments.

“It is clear that an interest rate reduction would be in this country’s interest. This was endorsed by president of the commission Barroso and has been referred to by others, including the Irish commissioner, Máire Geoghegan-Quinn, yesterday.’’