Press Release: Osborne's balanced budget law will bring sanity to public finances

For further comments or to arrange an interview, contact Head of Communications Kate Andrews: kate@adamsmith.org | 07476 915072 Commenting on the Chancellor George Osborne's Mansion House speech, Director of the Adam Smith Institute Dr Eamonn Butler said:

The rest of us have to live within our means, so why shouldn't government? Politicians used to have to raise taxes to pay for their expensive schemes. Then they used the inflation tax. Now they have discovered that they can pass their bills on to the next generation, by borrowing. That is not just bad economics. It's immoral.

A balanced budget rule is the only way to keep politicians' spending remotely under control. We've seen in recent years that politicians will use any opportunity to spend more, and even 'austerity' rarely ends up cutting spending in real terms.

Sound monetary policy can stop the economy from falling into depression. Government spending won't protect us from economic catastrophe, but it will drive up our debt bills and make us all poorer in the long run. Osborne is right to push for surpluses when the economy is healthy - we should all make hay while the sun shines.

Notes to Editors:

The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Sam Bowman's comments on ring-fencing banks feature in the IBTimes

Deputy Director of the Adam Smith Institute Sam Bowman's comments on the financial crisis and the problems with ring-fencing banks featured in the International Business Times:

Sam Bowman, deputy director, of the Adam Smith Institute, told IBTimes UK: "Ring-fencing is a terrible idea. For a start, the financial crisis was caused by investment-only banks [Bear Stearns, Lehman Bros, Merrill Lynch], not banks with both investment and retail arms. So ring-fencing would not have prevented the crisis."

It is possible to argue that banks are more robust the more diverse their operations are. For instance, during the Great Depression, the US's restrictions on interstate banking were very harmful. Banks had all their eggs in one basket and thousands of US banks failed, whereas none of Canada's half-dozen banks, which operated nationally, collapsed.

Since the Conservatives have won the election and regulation is not required as political expediency per se, the City has been hoping for an end to "banker bashing". The situation with HSBC only makes this more acute.

Bowman added: "The HSBC cuts are a sign that we can't take the financial sector for granted; yes, we have friendlier regulations than most, and it's unlikely that the whole City will up sticks and leave, but at the margin the government can have an important impact on investment and jobs in the UK.

"I do hope we stop getting so much banker bashing, mostly because that adds uncertainty to the financial system. Even if Osborne does not intend on imposing more punitive regulations and/or taxes on bankers, there is rhetoric that suggests he might confuse markets and make financial firms less likely to invest in the UK," he said.

Read the full article here.

Sam Bowman's comments on the LIBOR funds feature in the The Times and the Wall Street Journal

Deputy Director Sam Bowman's comments on the use of LIBOR funds have featured in The Times and the Wall Street Journal: From The Times:

More than £450 million has been allocated, but not everyone is happy. “I am actually a descendant of people who were in the Battle of Agincourt,” Sam Bowman, deputy-director at the Adam Smith Institute, an economic think tank, said. “Using bank fines this way degrades the whole point of the budget and Treasury, which is to spend money on the needs of the country, not a £1 million commemoration of a battle that happened 600 years ago.”

Read the full article here.

From The Wall Street Journal:

“I am actually a descendant of people who were in the Battle of Agincourt,” says Sam Bowman, deputy director at the Adam Smith Institute, a libertarian think tank in London. “But using bank fines this way degrades the whole point of the budget and Treasury, which is to spend money on the needs of the country, not a £1 million commemoration of a battle that happened 600 years ago.”

Read the full article here.

 

Tax Freedom Day has come: You’re finally working for yourself | Kate Andrews writes for City AM

Head of Communications Kate Andrews writes on Tax Freedom Day for City AM:
Congratulations – you, and the rest of the UK, have collectively paid off your taxes for the year, and it only took you 150 days to do it.
Every year, the Adam Smith Institute calculates Tax Freedom Day – the first day of the year when the average person stops working for the government and starts earning for themselves. This year, that was yesterday, 31 May.
Of course, there is no “average earner”. Lower earners will hit this landmark much earlier in the year, while many higher earners will be taxed for weeks more to pay off their bill. But our calculations measure the entire tax take. So even if you exclude the variability of direct taxes like income and National Insurance contributions, we are all still burdened by day-to-day taxes, like VAT, and stealth taxes that keep prices high throughout the year, like air passenger duty.

Read the full article here.

The ASI calculates Tax Freedom Day by measuring local taxes, direct and indirect national taxes, and national insurance contributions as a proportion of the UK’s net national income (41.2% per cent in 2015), mapping that proportion onto the days of the year.

Tax Freedom Day figures are not available up-to-date for calendar years so they are proxied from government and OBR forecasts and financial year numbers. They are then revised when exact numbers become available.

Click here for more information on previous Tax Freedom Days and Cost of Government Days.

Tax Freedom Day calculations feature in City AM

The Adam Smith Institute's Tax Freedom Day calculations feature in two City AM articles:

THE AVERAGE worker has spent the entire year until yesterday working for the government, and only now will earn for themselves, according to a study from the Adam Smith Institute.

Its Tax Freedom Day report studies the government’s overall tax take, including charges on spending as well as income, and uses the calendar year to illustrate how much revenue the Treasury takes each year.

Read the full article here.

The average British citizen works for 150 days of the year solely to pay their taxes, according to the Adam Smith Institute, organisers of Tax Freedom Day.

The UK's Tax Freedom Day fell on 31 May this year, one day later than it did in 2014. It is calculated by the Adam Smith Institute, and marks how many days of the year British residents would need to work just to pay their taxes.

It is based on the money raised by HM Revenue and Customs - including direct taxes like income tax and national insurance, as well as indirect taxes such as VAT and excise duties.

Read the full article here.

The ASI calculates Tax Freedom Day by measuring local taxes, direct and indirect national taxes, and national insurance contributions as a proportion of the UK’s net national income (41.2% per cent in 2015), mapping that proportion onto the days of the year.

Tax Freedom Day figures are not available up-to-date for calendar years so they are proxied from government and OBR forecasts and financial year numbers. They are then revised when exact numbers become available.

Click here for more information on previous Tax Freedom Days and Cost of Government Days.

Tax Freedom Day has arrived | Ben Southwood writes for CapX

Head of Research Ben Southwood writes on Tax Freedom Day for CapX:

Tax Freedom Day is upon us again. In 2015 the average person stops paying tax, and starts paying themselves, on 31st May. Every penny they earned from 1st January to 30th May, inclusive, went to the taxman.

Well, not quite. Firstly, and quite obviously, people pay tax throughout the year, not in one big block at the start. Secondly, lots of the total tax take comes from sources people don’t believe or know they themselves are actually paying. Thirdly, there is no average person; practically every single person in the country will actually stop paying tax either sooner or later than 31st May. Tax Freedom Day is not supposed to represent some actual experience for households — it is a regular, timely reminder of how large the state really is.

Read the full article here.

The ASI calculates Tax Freedom Day by measuring local taxes, direct and indirect national taxes, and national insurance contributions as a proportion of the UK’s net national income (41.2% per cent in 2015), mapping that proportion onto the days of the year.

Tax Freedom Day figures are not available up-to-date for calendar years so they are proxied from government and OBR forecasts and financial year numbers. They are then revised when exact numbers become available.

Click here for more information on previous Tax Freedom Days and Cost of Government Days.

Sam Bowman writes on Tax Freedom Day for Conservative Home

Deputy Director Sam Bowman writes on Tax Freedom Day for Conservative Home:

Benjamin Franklin said that only two things in life are inevitable: death and taxes. Death is more permanent, but it comes just once in our lives. Taxes are ever-present.

What’s worse, most of us only have a vague idea about how much tax we’re actually paying. 20 per cent? Well, that’s income tax, but we pay National Insurance on our income, too, which adds another 12 per cent. What’s left is taxed when we spend it.

Read the full article here.

The ASI calculates Tax Freedom Day by measuring local taxes, direct and indirect national taxes, and national insurance contributions as a proportion of the UK’s net national income (41.2% per cent in 2015), mapping that proportion onto the days of the year.

Tax Freedom Day figures are not available up-to-date for calendar years so they are proxied from government and OBR forecasts and financial year numbers. They are then revised when exact numbers become available.

Click here for more information on previous Tax Freedom Days and Cost of Government Days.

Tax Freedom Day calculations feature in The Sunday Telegraph

The Adam Smith Institute's Tax Freedom Day calculations featured in the Sunday Telegraph:

The burden of taxation has fallen more heavily on Britons this year, despite the Government spending less.

Tax Freedom Day - the point at which the average person stops paying tax, and can start earning for themselves - falls on Sunday, a day later than last year.

The symbolic milestone reflects the growing share of our incomes that is paid to the Treasury as tax.

The Adam Smith Institute (ASI), which calculates when the day falls in the UK, said that the later date serves as a reminder that “the Government needs to make tax cuts a priority in this parliament”.

Read the full article here.

Tax Freedom Day also featured in several online Telegraph articles, which included a Tax Freedom Day calculator that allows you to calculate when you are free from income tax.

The ASI calculates Tax Freedom Day by measuring local taxes, direct and indirect national taxes, and national insurance contributions as a proportion of the UK’s net national income (41.2% per cent in 2015), mapping that proportion onto the days of the year.

Tax Freedom Day figures are not available up-to-date for calendar years so they are proxied from government and OBR forecasts and financial year numbers. They are then revised when exact numbers become available.

Click here for more information on previous Tax Freedom Days and Cost of Government Days.