The government wants to increase the top and bottom rates of tax by two percentage points and introduce a new super tax for high earners in next month's mini-budget.
Workers will be hit by well over €1bn in extra tax levies in the mini-budget with lower paid workers, previously exempt from tax, certain to be brought into the net.
However, the government faces huge administrative difficulties in raising tax rates this far into a new tax year. Unless some way can be found, the government is instead likely to temporarily, but sharply, increase the existing income and health levies. These increases would then be replaced by more conventional tax rate rises in December's budget.
Close consideration will be given to lowering or even scrapping the threshold at which workers have to pay the two levies. There is a consensus that the current system whereby 40% of income earners pay no tax will have to end as it is unsustainable, however politically unpalatable it might be.
While the government has yet to finalise what exact measures will be in the mini-budget, it is accepted that the 'old reliables' of cigarettes, alcohol and petrol will be be hit hard.
Tax increases are expected to account for around €3bn of the €4.5bn in extra revenue the government needs to raise for the current year, as ministers feel it will be extremely difficult to come up with cost savings beyond €1bn to €1.5bn.
The €3bn a year lost to the exchequer through tax relief on pensions is likely to come under scrutiny. The fear within government is that scrapping this relief would destroy the entire private sector pension system, leaving everyone to rely on a state pension. However, consideration will be given to limiting tax relief to the standard rate of taxation with senior sources describing this as a "strong possibility".
The limited time frame between now and 2 April means that the government won't introduce a property tax or taxation of child benefit. However, the intention to introduce a property tax later this year could well be flagged. And further cuts in the early childcare supplement are described as "probable, rather than possible".
The introduction of carbon taxes, long demanded by the Greens, could also happen in the mini-budget.
Even with deflation, cuts in the rate of social welfare are still seen as unlikely, though they are not yet ruled out because of the huge savings that could be generated by a cut of 1% or 2% in social welfare rates. One possibility could be a scrapping of the traditional Christmas bonus payment.
"There is going to be pain, a lot of pain. Let's hope there's some gain. There is simply no choice. There is no easy way out of this," said one senior government figure.