Finance Minister, Mr McCreevy, under pressure from euro zone colleagues to cool his country's searing economy, last night defended the right of governments to decide their own tax policies.
Mr McCreevy told a televised meeting of EU finance ministers that the level and mix of taxation had to be a matter of political choice for each member state in assessing what policy instruments it considers most appropriate to its own needs and circumstances.
Several ministers said Ireland's economy and its budgetary outlook had been a focus of discussions late last night between euro zone ministers but they declined to give details.
EU finance ministers are due to issue a written opinion on Ireland's budgetary situation at their next meeting on February 12th.
European monetary officials said prior to yesterday's talks that many countries were worried an expansionary budget full of tax cuts presented by Mr McCreevy in December may stoke inflation.
The Central Statistics Office reported today that inflation fell sharply in December to 5.9 per cent from 7.0 per cent in November.
Reuters