IRELAND’S TAX burden - its tax revenues as a share of gross domestic product - declined by 3 percentage points between 2007 and 2009, as the tax burden across industrialised nations fell to the lowest level since the early 1990s.

A report published yesterday by the Organisation for Economic Co-operation and Development (OECD) shows that Ireland’s tax burden peaked at almost 35 per cent in 1985, but had fallen away to an estimated 28 per cent by 2009. Tax revenues fell in most of the OECD’s 34 member countries during 2009 due to declining economic activity and tax cuts aimed at cushioning the effects of the recession that followed the financial crisis, the Paris-based think tank said.

Jeffrey Owens, director of the OECD’s Centre for Tax Policy and Administration said the impact on revenues had been far more severe than at any time since its records began in 1965.

He said he had been surprised by the extent of the fall in some countries. The tax burden declined more than 5 percentage points between 2007 and 2009 in Spain, Iceland and Chile.

In 2007, the OECD-wide tax burden was 35.4 per cent, dropping to an estimated 33.7 per cent by 2009.

Mr Owens said it was unclear how quickly the overall trend would be reversed, and it would depend to a large part on growth. Countries differed on the speed with which they intended to address the deficit, but several have already started raising taxes. Many have signalled plans to raise extra revenues by cracking down on avoidance and evasion.

Denmark continued to bear the highest tax burden, coming in at 48.2 per cent in 2009.