In an address to business leaders at the Ibec president’s dinner, Enda Kenny described the 52% marginal rate, comprising income tax, PRSI, and universal social charge, as “anti-enterprise, anti-investment, and anti-jobs”.

“It is damaging not alone our businesses, our workers, and their families, it is equally damaging to Ireland’s attractiveness as a location for foreign investors,” he said.

“I believe it will make it harder to get our emigrants to come back home as the recovery continues.”

Earlier, it emerged no further tax increases or spending cuts are needed in October’s budget as figures show the economy is growing at its fastest rate since 2007.

GDP increased by 1.5% over the second quarter — and 7.7% compared with the same period in 2013. Ireland is now the fastest growing economy in the EU.

Showing how quickly the economy is recovering, Finance Minister Michael Noonan said the growth rate for 2014 could reach 4.5%. The Department of Finance last week forecast GDP growth of 3.1% for this year. Earlier this year it predicted 2%.

Davy Stockbrokers economist Conall Mac Coille said GDP could grow by 5% this year.

Mr Noonan said: “I would hope we will see growth of 3% over the next five years and, God willing, over the next 10 years.”

He said he expects the budget deficit to shrink to 3.5% by the end of this year. The agreement with the troika was that the Government would hit a 4.8% deficit this year and 3% next year.

However, Mr Noonan was quick to dampen expectations that the Government would be in a position to loosen the purse strings in October’s budget. “I don’t think there is a clamour for a giveaway budget. The priority for this Government is to sustain the recovery and turn the recovery into jobs.”

Apart from the water charges, which are due to come into effect from January of next year, the budget will be neutral, he said.

In their last review of the economy released in April, the European Commission and IMF urged the Government to implement €2bn in budget cuts to reach the 3% deficit target.

“We will still have to do a €2bn consolidation but the thing is we won’t have to do it by extra taxes or extra cutbacks. There is enough tax buoyancy in the growing economy to deliver the resources to do that level of consolidation,” Mr Noonan added.