IBEC is expected to publish a pre-election document later this week which will warn that the parties shouldn't consider cutting taxes while the economy is performing strongly. It will, however, back the indexation of wages to tax bands.

Meanwhile, the manager of the ESRI's macroeconomics division, John Fitz Gerald, has said that it still believes that any reduction in income tax rates would be unwise.

"A stimulating budget is just what the economy doesn't need at the moment, " he said.

Both organisations are believed to be worried about the effect that the increased personal disposal incomes that would result from income tax cuts could have on consumption. This could cause 'demand-pull inflation' where there are too few goods available to meet consumer demand, driving up both prices and wages.

"The overriding priority for the parties is to assess what affect their economic policies will have on inflation, " said Fergal O'Brien, a senior economist with IBEC. "At the moment, the economy is doing exceptionally well and we don't need any stimulus in terms of consumer demand."

However, several other leading economists have said that the proposed tax cuts are unlikely to have a significant effect on inflation. "My guess is that unless you had a mega change, you would never be able to measure it, " said Ulster Bank's chief economist, Pat McArdle.

"It depends on the amount of extra money in your pocket and the state of the economy at the time. If it's slowing down, you may not notice the difference. If it's booming, you could have demandpull inflation, " he said.

Austin Hughes, chief economist of IIB Bank, also said that the proposed cuts wouldn't have a dramatic effect on Ireland's competitiveness. "A lot depends on how it is phased in but it's hard to see how if will effect consumer sentiment in such a way that consumers will start to fly into the shops and bid up wages, " he said.