The government is promising to cut the Universal Social Charge (USC) in the next budget.

It is instead of a cut to the higher tax rate, and will come ahead of the general election.

The State financial watchdog has warned the government to stick to budgetary guidelines.

Mr Kenny has signaled the budget intentions of the coalition and that cutting personal taxes will drive recovery similar to the way our corporation tax rate drove investment.

After the tax cuts in the last budget, the marginal tax rate here fell from 52% to 51% - but that is still well ahead of the OECD average of 46%.

People who are classed as middle-income earners, of below €70,000, pay that much tax on a portion of their income when the higher rate of tax is applied along with PRSI and the USC.

In the last budget the focus was on a cut to the top rate of tax, as well as some reductions in the USC.

It is expected in the next budget that most if not all of the tax cuts will be focused on the USC.

Chief economist with Goodbody, Dermot O'Leary, told Newstalk Breakfast the coalition does not have too much money to play with.