Higher taxes for top earners could put foreign companies off investing in Ireland, Jobs Minister Richard Bruton has suggested.
As IDA Ireland revealed 6,570 jobs were created in 2012, the minister insisted that employment cannot be boosted by taxing work.
"We have to realise we are in a very competitive environment. One of the issues that people look at is the so-called tax wedge. The gap between what the employer pays and the employee receives," Mr Bruton said. "It is undoubtedly one of the issues that companies look at when they are sizing up different countries."
The minister welcomed the latest figures from IDA, the Government agency responsible for attracting direct foreign investment to Ireland. Its 2012 report shows the number of jobs created last year is the highest in more than a decade, while the 6,152 job losses are the lowest in over 10 years.
Mr Bruton said creating jobs is a top priority and that tax is an issue the Government has to be aware of. "We are conscious that if you want to create employment you can't tax work." But he added: "I'm not trying to make a pronouncement on budgetary strategy."
The minister also defended Ireland's low corporation tax. He said the 12.5% rate, which has come under fire from other eurozone countries calling for a standardised rate across the group, is a red-line issue for Ireland.
Foreign companies make their decision to invest in a country depending on its tax rates and that since attracting investment and boosting jobs is Ireland's priority, protecting the 12.5% rate is vital, he said.
Mr Bruton also rejected suggestions that the rate is unfair. "We have a clear and transparent tax code. It's there for all to see. Lots of people would criticise it because they don't like what we do but it's always clear that it doesn't break any rules," said Mr Bruton.
IDA chief executive Barry O'Leary warned that Ireland faces high competition in the year ahead from the UK, the Netherlands and Switzerland. But he said the organisation still hopes to create a further 6,500 jobs this year. Global giants Apple, PayPal, Northern Trust and EA Games are among those making up the biggest investments during 2012. IDA said 145 individual investments were made, with 66 from companies coming to Ireland for the first time.
Mr O'Leary said there are strong opportunities for further growth in the IT sector, particularly in financial services, life sciences and digital media.