UK's Tax Freedom Day Slips Back Into June

by Robert Lee, Tax-News.com, London

31 May 2006

Chancellor Gordon Brown's 2006 Budget has moved Tax Freedom Day for the British taxpayer back a further three days, according to the Adam Smith Institute, a free market think tank.

The ASI says that the average income earner in the UK will work until June 3 this year in order to pay all direct and indirect taxes in 2006. This is three days later than in 2005 and seven days later than 2004. This means that Tax Freedom Day in 2006 is the latest that it has been since 1988.

“The balloons are going up at the Adam Smith Institute as we prepare for our annual Tax Freedom Day party," remarked Eammon Butler, director of the Adam Smith Institute.

"Thanks to Brown, this event is getting later and later in the year. In 2006 we have to work three days more for the tax collector than we did in 2005, and a week later than we did in 2004," he observed.

The ASI has calculated Tax Freedom Day for every year since 1963, when it fell on 24 April. Ever since, the day has generally fallen later and later in the year, apart from a dip in the mid 1970s, reaching a peak of June 15 in 1982.

While the UK's Tax Freedom Day generally falls earlier than its major European competitors such as Germany and France, it still comes much later than in the United States, where this year the day fell on April 26, according to calculations by the Tax Foundation.

Accounting firm Ernst & Young has forecast that the UK's total tax burden, excluding North Sea oil revenues, will grow to 38% of gross domestic product in 2010/11 - higher than the previous peak of 37.7% in the early 1980s.

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