The Department of Finance has played down internal papers which suggest income tax could face a 10% hike if USC is scrapped.

The claims come in an internal briefing paper, prepared by civil servants for the finance minister Michael Noonan.

The paper, written in February and obtained by Sinn Féin TD Pearse Doherty, outline options the government might have to pursue in order to make up the €4 billion shortfall that would be created by scrapping USC.

• Read in full: Michael Noonan's briefing papers on scrapping USC

The most dramatic option would involve increasing the lower and higher income tax bands by 5% - meaning an effective 10% increase at the top rate of PAYE, for those on the average wage.

Another option would be corporation tax - where the rate would have to be brought to almost 20 per cent to make up the lost revenue.

If it was made up through indirect taxes, the price of beer would go up 1.50 per pint, and petrol and diesel by 18c a litre - on top of massive hikes to VAT.

However this morning the Department of Finance says the paper is "not relevant in the current context" and deals with the prospect of scrapping USC overnight, which the government does not intend to do.

Instead the plan is to phase out USC over the next five budgets, with a new levy on higher earners introduced to make up some of that lost ground.

Officials told the minister that this option would not make Ireland's tax code any simpler - as the new charge might apply to different forms of income.

Pearse Doherty says the memo underlines the tough measures that would be needed to replace the revenue taken in by USC.

And he says any new levy introduced on higher earners would not reclaim all the revenue needed: