Channel 4: Average worker clears tax bill

altBritons had to work until Thursday May 14 just to earn enough money to cover all the tax they must pay during 2009, research showed.

The Adam Smith Institute said it would take the average worker 134 days to earn the money they would hand over to the Government through income tax, National Insurance, VAT and other taxes.

But it warned that once government borrowing was factored in, people would have to work until June 25 before all Government expenditure had been covered - the worst figure since 1984.

The group said the gap between Tax Freedom Day based on actual revenues and Tax Freedom Day based on Government spending was now the widest it had been since the early 1970s, and possibly since the Second World War.

It added that the June 25 date was also likely to be too early, as the Government's borrowing forecasts were likely to be optimistic, and the actual day was likely to be pushed back beyond the half year mark.

Gabriel Stein, chief economist at Lombard Street Research who calculates Tax Freedom Day, said: "Running up deficits can be described as a form of deferred taxation.

"The effect will be that when the economy recovers - as it will eventually do - the UK tax burden is likely to rise much faster than would otherwise have been the case and Tax Freedom Day is likely to creep later and later in the year."

The group said that although Tax Freedom Day this year was the earliest since 1973, this was only because it reflected the amount of money actually raised through taxes, which have fallen due to rising unemployment and business failures.

It added that the Government's preferences for stealth taxes in the past few years meant it was becoming harder for people to understand how much tax they were paying.

Eamonn Butler, head of the Adam Smith Institute, said: "The average person spends four-and-a-half months of the year working for Gordon Brown. May 14 is the day when we have worked off our tax bill and at last start working for ourselves."

Published on Channel Four here

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