The ESRI says the cost of implementing the Government's tax plans could be €750 million.

The economic think tank has released an analysis of the Government's proposals outlined in the Spring economic statement.

The Coalition says it has €1.5 billion more in the state coffers than expected.

But the ESRI says almost half of this so-called "fiscal space" will be spent, if the Government pursues plans to keep welfare payments in pace with inflation and reduce the Universal Social Charge.

In the paper, the group says "with the return of modest wage growth in 2016, average tax rates in the 'opening budget' would be higher than in 2015, both for individuals and in aggregate. Part of the 'tax cuts' likely to be announced in Budget 2015 will simply be ‘avoiding’ this rise in the average tax rate."

Tim Callan, a Resarch Professor with the ESRI, says it all depends on wage growth: