UK Tax Freedom Day Due On June 1

by Robert Lee, Tax-News.com, London

29 May 2007

Britons will effectively have to work until June 1 this year just to pay off what they owe to the government in taxes, according to the Adam Smith Institute, the free market think-tank.

Tax Freedom Day shows just how long we spend working for the Treasury, rather than for ourselves. Overall, the ASI says that the government takes more than 40% of national income - meaning that the average UK resident has to work a full five months of the year solely to pay their tax bill.

The ASI calculates Tax Freedom Day by taking the UK's net national income and calculating how much of that is taken away in taxes. These taxes include not just income tax, but VAT, inheritance tax, stamp duty, car and fuel taxes, excise taxes on alcohol and cigarettes, taxes on companies and employment, and many more.

Chancellor Gordon Brown's 2007 budget did nothing to move Tax Freedom Day either backwards or forwards this year, but TFD has been getting steadily later in the year, according to the ASI's calculations, falling a full week later now than it did back in 2002.

The Institute has been calculating Tax Freedom Day since 1991, and has figures for it going back to 1963 – when Tax Freedom Day was more than a month earlier, falling on 24 April.

By comparison, Tax Freedom Day in the United States comes a full month earlier than it does in the UK, falling this year on April 30, according to the Tax Foundation. Nevertheless, the Tax Foundation's President Scott A. Hodge says that Americans will still spend longer paying for government (120 days) than they will paying for food, clothing and housing combined (105 days).

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