Taoiseach Leo Varadkar has said he is determined that the Government will have enough money to cut income taxes in the October budget, even if that means raising other taxes.

The Taoiseach said he is not ruling out other revenue raising measures to pay for reductions in income taxes, and gave the previous example of increasing duties on cigarettes.

Mr Varadkar’s first budget will be very tight, with the so-called “fiscal space” - the amount of new money that can be spent - estimated be around €550 million. This figure, however, includes money that will be spend on the public sector pay deal.

The confidence and supply deal between Fine Gael and Fianna Fáil commits the Government to splitting available resources on a two thirds to one third basis in favour of public spending over tax cuts.

Mr Varadkar, speaking at the Government’s National Economic Dialogue in Dublin Castle, said he was “determined” to find resources for income tax cuts.

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“I am determined that we find some space to increase the take home pay of two million people who work really hard in this country, who get up every day, go to work, pay the taxes that make everything else possible,” the Taoiseach said.

“It is always the case in almost every budget that there are revenue raising measures. For example, in the last budget there were increases in cigarettes for example, but again no specific decisions on any revenue raising measures have been taken but I am certainly not ruling them out.

“We are not going to make any decisions on the budget until September or early October but whatever fiscal space we have available, I think it is important that a portion of that, even if it is only a small portion, goes back into the pockets of two million people who work in this country.”

Mr Varadkar also indicated he would seek to squeeze extra money from existing Government resources.

He said he believed there could be as much as €530 million of “hidden fiscal space”.

“We have in this year’s budget voted spending of €53 billion,” the Taoiseach said. “Are we sure they all represent best use of resources? If 1 per cent of this money was changed we would have €530m extra. This is the hidden fiscal space and we need to examine this as the cost of doing nothing is too great.”

Mr Varadkar was asked about his telephone call with US President Donald Trump on Tuesday and said there was “no significance” to the fact that Mr Trump had to wait on the line for 90 seconds to speak to him.

He said the two leaders spoke about free trade, Brexit and the border with Northern Ireland. Mr Trump also invited Mr Varadkar to Washington next year for the annual St Patrick’s Day trip.

When asked if the Dáil would pass the Judicial Appointments Commission Bill by the summer recess, Mr Varadkar said: “If we can but that is up to the Dáil. I don’t control that.”