The tax burden in Ireland fell last year, from 29.9 per cent of GDP to 28 per cent, according to the OECD's annual Revenue Statistics released today. This is considerably lower than the European average of 39 per cent.
The report showed that tax revenues amounted to 40.5 per cent of gross domestic product (GDP) in the European Union last year, down from 41 per cent in 2001.
Ireland was one of a number of countries in which the tax burden declined. Others were Austria, Hungary, the UK, Canada, Greece and Turkey, where the tax ratio declined by over one percentage point.
Driving the fall was a series of tax cuts in each of these countries coupled with the economic downturn and falling corporate profits.
According to the OECD the economic slowdown lowered the take from income taxes in a number of countries. "Slower economic growth translates into lower income and a lower tax bracket for many people".
Recent figures from the Department of Finance indicate that revenue from income tax rose by just0.6 per cent to €5.86 billion in the nine months to September 2003. This is below the target set.