Happy Tax Freedom Day! UK taxpayers have finally stopped working for the taxman and started working for themselves. But as it’s almost June, perhaps we shouldn’t be jumping for joy.
The Adam Smith Institute calculates Tax Freedom Day every year. For 149 days of 2012, every penny earned by the average UK resident will have been taken by the government in tax. And the problem’s got worse too – this year’s Tax Freedom Day falls two days later than it did in 2011.
The ASI says that freedom from the state actually occurs on 23 June, when you add in the cost of borrowing. Our research at the turn of the year factored in the cost of regulations, which means that the Cost of Government Day will extend as far as 26 July this year.
The ASI’S annual calculation is a vital reminder that we are overtaxed in the UK. Last week we released the final report of the 2020 Tax Commission, which recommended that the overall burden of taxation should fall to 33 per cent of GDP. If that happened we’d see better news from the ASI, instead of finding out that Tax Freedom Day is occurring later and later every year.