The Republic has retained the mantle of lowest-taxed state in the EU, even within an enlarged 25-member Union.

A new analysis from Eurostat shows that, in 2002, the Republic's overall tax burden was the equivalent of 28.6 per cent of gross domestic product (GDP).

This compared to an average EU-25 tax-to-GDP ratio of 40.4 per cent in the same year. Sweden had the highest ratio of 50.6 per cent.

Apart from the Republic, Lithuania boasted the lowest ratio of 28.8 per cent.

Even though the Republic had the lowest overall tax burden, it was shown to have levied the heaviest proportion of indirect taxes of all the then EU and accession states.

Eurostat found that indirect taxes - which include VAT and excise duties - represented 43.7 per cent of the overall tax burden in Ireland in 2002. For the 25 EU states as a whole, the equivalent figure was 34.8 per cent, while in the 15 member-states in 2002 indirect taxes accounted for 34.6 per cent of the tax burden.

The Republic also had a relatively high level of direct taxes in 2002, with business and personal taxation providing 40.8 per cent of the overall burden. The EU-25 average on this measure was 33.1 per cent, with Poland at the bottom of the table with 18.7 per cent.

The level of social security contributions in the Republic was fairly low too, with such payments representing just 15.5 per cent of the overall tax burden. This compared to 32.1 per cent for the EU-25 and was the second-lowest level recorded.

The study shows that, in the EU-15 as a whole, labour taxes were the largest source of tax revenue in 2002, contributing about 50 per cent of total tax receipts. Taxes on capital, meanwhile accounted for about 20 per cent of the total, while consumption taxes provided the remainder. The effective tax rate on labour across the 15 EU states stood at 36.3 per cent in 2002, down from 36.8 per cent in the previous year. In the Republic, this rate was 25.9 per cent, down from 27.5 per cent.

On capital, the effective tax rate in the Republic in 2002 was 32 per cent, compared to 28.4 per cent for the EU-15.

Figures for tax rates for 2004, meanwhile, show that the Republic continues to apply the lowest corporation tax of the entire EU with a rate of 12.5 per cent. The highest corporation tax rate of 38.3 per cent is levied in Denmark.