Tax Freedom Day: We're Slaves to the state until 30 May

30 May 2011

  • Britons have worked 149 days to pay their taxes in 2011 – three days longer than in 2010.
  • Regional figures reveal that Londoners have to work the longest to pay off their income tax burden (51days) whilst the Welsh spend the least time paying their income tax (35days)
  • UK income taxpayers would have to work for almost a year and a half with all their money going to the government to pay off our national debt.

The Adam Smith Institute, the libertarian think tank, has released calculations today (Monday 30th May 2011) revealing the shocking length of time we work to pay off our tax bill. Britons have worked for a full 5 months this year to pay their taxes, with every penny earned in the UK between January 1 and May 29 taken by the taxman to support government expenditure.

This means that Tax Freedom Day, the day when people stop working for the government and start making cash for themselves, will come on May 30 in 2011 – 3 days later than in 2010.

The main reason for this is that the government has raised VAT, in order to help reduce the UK’s record budget deficit.

New calculations by the ASI also reveal the worrying extent of the UK’s debt. Our burden of debt is so great that UK income taxpayers would need to work for nearly a year and a half (525 days) - with their entire wage packet going to the government, and not a penny being spent on public services – to pay off the national debt.

Dr Madsen Pirie, President of the Adam Smith Institute identified the linkage between the lateness of Tax Freedom Day and the government’s attempt to tackle the deficit and UK debt:

“The last government left an appalling legacy. Its reckless spending has driven Britain into record levels of debt that threaten the lives and happiness of future generations. Bringing down that debt has to be an absolutely urgent priority. However it isn’t enough to merely cut spending. We need targeted tax cuts to encourage economic growth.”

Sam Bowman, Head of Research added: “Tax Freedom Day underlines the huge burden of government on working people’s lives. For five months of the year, we are slaves to the state. No wonder growth is so slow – we need robust tax reform now, bringing lower, simpler, flatter taxes. The government should resolve to make Tax Freedom Day something we can celebrate earlier and earlier each year.”

A full breakdown of how long it takes Britons to pay off each tax can be found in the Notes to Editors (below). The tax burden also varies by region, falling more heavily on some and more lightly on others. The figures below show, in ascending order, how long each region has to work in 2011 to pay income tax:

  • Wales 35 days
  • North East 36 days
  • Northern Ireland 37 days
  • North West 37 days
  • Yorkshire and the Humber 37 days
  • West Midlands 37 days
  • East Midlands 38 days
  • South West 38 days
  • Scotland 38 days
  • East of England 42 days
  • South East 44 days
  • London 51 days

ENDS

Britons as a whole work the following amount of days to pay each of the following taxes:

  • Income Tax 39 days
  • National Insurance 26 days
  • VAT 29 days
  • Corporation Tax 12 days
  • Fuel duties & petroleum revenue tax 7 days
  • Local taxes (business and council tax) 13 days
  • Capital gains / inheritance tax 2 days
  • Duties on alcohol and tobacco 5 days
  • All other taxes 17 days

How is Tax Freedom Day calculated?

  • Tax Freedom Day aims to answer a very basic question: ‘how much are Britons actually paying for government?’ It is calculated by comparing general government tax revenue with the Net National Income (NNI). The total of all government tax revenue – direct and indirect taxes, local taxes and National Insurance contributions – is calculated as a percentage of NNI at market prices. This year it comes to 40.8 percent. That percentage is then converted to days of the year, starting from 1 January. The first day of the year that Britons work for themselves rather than the taxman is Tax Freedom Day.
  • The Adam Smith Institute is Britain’s leading innovator of free market economic and social policies. For more information on our work, go to www.adamsmith.org.

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