Tax revenue up as percentage of GDP

Tax revenue as a proportion of gross domestic product rose in most OECD member-states during the 1990s, including the Republic.

A new report from the OECD shows that taxes on income and profits as a percentage of GDP in the Republic rose from 12.4 per cent in 1990 to 13.4 per cent in 1998. During the same period the figure for the OECD rose from 13.3 per cent to 13.5 per cent.

"In the absence of any general upward trend in statutory income tax rates in OECD countries, the rise in income tax revenues was a reflection of strong economic growth during the period," the report said.

"In the case of personal income taxes, this is because of their progressive structure, in which a higher proportion of income is taken in tax as income rises.

"In the case of corporate income tax, this is because corporate profits tend to increase more than in proportion to output."

The average OECD tax take increased from 13.2 per cent in 1997 to 13.5 per cent in 1998, reversing a declining trend from 1990 to 1996. The figure for the Republic rose steadily through the period from 1990 to 1998. The provisional figure for the Republic for 1999 was 13.7 per cent.

Under the heading of environmentally related taxes, governments continue to derive their largest revenues from excise taxes on transport fuels.

"Despite pressures from the environmental lobby for higher taxes on the use of non-replaceable energy resources however, the relative importance of these revenues has stayed fairly constant in industrialised countries over the past few years."