The tax burden rose last year but still remains well below the international average, according to new figures from the Organisation for Economic Co-operation and Development.
They show that tax revenue rose to 30 per cent of GDP last year from 28.4 per cent in 2002, but still remains the lowest among the 15 EU states.
A breakdown of the figures shows that the income tax burden on those in work in Ireland is below the international average, particularly for lower earners.
The OECD data have been hotly debated in the past. Critics say that because GDP here is inflated by multinational profits - the bulk of which are subsequently repatriated - expressing the take as a percentage of GDP understates the burden.
The figure of 30 per cent tax burden as a percentage of GDP is below the average of the then 15 EU members of about 40.6 per cent. The average in all industrial countries is around 36 per cent, pulled down by the US, where the burden is 25 per cent.
However, measured using gross national product - the measure of national output which excludes repatriated profits - the tax burden here rises to around 36 per cent. This is in line with the OECD norm though it still below the average of the EU 15.
The figures show that tax revenues as a percentage of GDP levelled off or rose slightly in many countries last year, following falls between 2000 and 2002. The recovery in revenues last year probably reflects the economic recovery, though in Ireland the lack of indexation of tax bands and credits in the 2003 Budget and increases in some indirect taxes will also have contributed.
The OECD figures on international comparison of tax from different areas are for 2001 and are thus a bit dated. They show that social security and property taxes make a relatively small contribution to total tax revenue here, while indirect taxes such as VAT and excise accounted for 39.5 per cent of total taxes, well above the 31.9 per cent OECD average.
Taxes on personal income at 26.2 per cent of total revenue were close to the norm. The data confirm that the 12.5 per cent corporation tax rate is the lowest in the OECD.
However, the figures also show that the average tax burden on employees here is low by international norms. The percentage of income that goes in tax for a single person on the average industrial wage is calculated as 16.4 per cent for Ireland, against an OECD average of 24.8 per cent.
The data show that the marginal income tax rate - the rate paid on an additional euro of income - is also below the international average here for lower earners and for those earning the average industrial wage.
While the marginal rate is also lower for very high earners, the group earning just over 1½ times the average industrial wage face a marginal rate of 44.5 per cent - around the international norm.
