Slashing income tax rates would jolt the economy into rapid growth and underwrite the Republic's future prosperity, Mr Steve Forbes told an audience in Dublin yesterday.

The president of Forbes Inc and editor-in-chief of the influential Forbes magazine said that bringing income tax into line with the Republic's 12.5 per cent corporate tax rate, among the world's lowest, would fuel consumer spending and stimulate entrepreneurship.

In an address to the president's lunch of the Irish Auctioneers and Valuers Institute (IAVI) in Dublin, he said reducing the tax burden on consumers and businesses was not "a zero-sum game" because the inevitable economic rejuvenation would translate into a higher Government tax take.

Mr Forbes was lavish in his praise of the controversial tax cuts package in the US which President Bush pushed through Congress last summer.

The first stirrings of recovery in the US will buoy the European economy next year, said Mr Forbes, who forecast a 4 per cent growth rate for the Republic in 2004.

Urging the Government not to take prosperity for granted, Mr Forbes said it was important for the State to upgrade its infrastructure, through borrowing if necessary.

Rather than fearing the entry into the EU of former Eastern Bloc states determined to ape the Republic's low corporate tax regime, the Republic should welcome the arrival of dynamic, forward-looking economies, he said. These new members will fundamentally alter the tenor of the EU, prompting a shift from the welfare state models favoured by France and Germany to the more strident brand of capitalism of which the Republic is an exponent.

Fears of a sharp and sudden downturn in the residential property market were unfounded, Mr Forbes said. Such a slump would require a cataclysmic economic collapse - a highly unlikely occurrence.