Income tax has remained at about 21 per cent of income on average through the 1990s, despite reforms in various budgets, according to a new report.

More people at work and higher income levels offset the impact of tax cuts on the average proportion of income paid in tax, Mr Eunan King, senior economist at NCB Stockbrokers, says in his report Changing Incomes - Unchanged Taxation. Budget 2001 would need to provide tax cuts of £750 million (€952 million) to counter the tendency for the tax burden to rise as incomes rise, he says. "The average tax rate in 2001 will rise by one and a half to two percentage points if no tax cuts are made in this year's forthcoming Budget," according to Mr King. Stating that a decrease in tax rates is necessary to keep the tax burden from rising, Mr King argues that this would not adversely affect Irish inflation. It is clear from his research, Mr King says, that income tax reform has not stimulated the economy because the average tax burden has remained unchanged through the last decade.

"Budgetary tax changes have done no more than offset the tendency for the average tax rate to rise in a progressive system," he says.

Breaking down his tax figures by income levels, Mr King found that the average tax rate for the top 10 per cent of tax payers increased by 0.4 of a percentage point from 29.6 per cent to 30 per cent over the period. For the next 30 per cent of taxpayers, the average tax rate fell from 21.8 per cent to 20.5 per cent. The average rate for the remaining 60 per cent of taxpayers fell from 11.2 per cent to 10.2 per cent.

Mr King's income tax analysis was based on data from the annual statistical reports of the Revenue Commissioners since 1990, in which income tax figures are based on completed year-end reports from employers, and national income and expenditure figures.