TAX BURDEN NOW HIGHER THAN AT ANY TIME UNDER NEW LABOUR
Taxpayers worked 148 days for the Chancellor this year, today is the first day they start working for themselves
- Tax Freedom Day falls on May 29th the latest it's been since 1995
- Brits work 148 days of the year solely to pay taxes, 3 days more than last year, but as of today workers are earning for themselves
- UK Taxpayers will fork out over £700bn to the Treasury this year, 40.65% of net national income
- Cost of Government Day, which factors in borrowing as well taxes is the earliest it has been since 2008. The UK is successfully bringing down the deficit, but spending is still too high.
- With tax demands at record highs, if political parties want economic growth they need to come up with ways to reduce, not increase, the national tax burden.
Tax Freedom Day is a measure of when Britons stop paying tax and start putting their earnings into their own pocket. In 2018, the Adam Smith Institute has estimated that every penny the average person earned for working up to and including May 28th went to the taxman—from May 29th onwards they are finally earning for themselves.
British taxpayers have worked a gruelling 148 days for the taxpayers this year. More than in any year under New Labour, and three days longer than last year. Britain’s tax burden is moving in the wrong direction.
Government spending choices fall on UK Taxpayers, this year they will fork out £703.7bn—representing 40.65% of net national income.
Tax Freedom Day in the United Kingdom is now over a month later than in the USA, where this year it fell on April 19th.
The ONS has revised net national income data and the Adam Smith Institute has calculated this means Tax Freedom Day is later than any day since reliable records began in 1995. The shortest number of days worked to meet HMRC’s tax demands was 122 in 1996.
In a sign of good news though, Cost of Government Day this year falls on 21st June with the smallest gap after Tax Freedom Day in over a decade. The Cost of Government Day calculates spending over net national income—i.e. including debt-financed government activity, which we must eventually pay, as well as tax-financed government spending.
While it’s good news the gap is getting smaller, the money borrowed to cover the near month-long gap since Tax Freedom Day must eventually be paid off with future taxes.
With squeezed budgets, low wage growth, inflation above target and high housing costs, UK taxpayers cannot afford budget proposals from Left or Right that attempt to squeeze more money from taxpayers. Instead politicians should look at reducing the size of the state, and reforming our taxes.
The Adam Smith Institute singles out two tax changes that would boost growth and the pay packets of Britons right across the country:
- UK Government should move to take the poorest out of tax altogether. With budgets tight across the government should boost the take home pay of minimum wage workers by raising the National Insurance Contribution threshold in line with that of income tax.
- Governments across the UK should abolish stamp duty (in Scotland the Land and Buildings Transaction Tax). Britain’s most damaging tax, Stamp Duty destroys 75p of wealth for every pound raised. The Government should prioritise cutting the taxes that do the most harm.
Dr Eamonn Butler, Founder and Director of the Adam Smith Institute, said:
“In the Middle Ages, a serf only had to work four months of the year for his feudal landlord, whereas in modern Britain people have to toil five months for the tax gatherers.
“It appears Britain is stuck in the past with an over-large and inefficient public sector that has cost each of us 148 days' hard labour this year, the most in over two decades.
“Since the the great recession a decade ago Britons have been economising to live within their means. Frankly, it’s about time government did too.”
Mark Littlewood, Director of the Institute of Economic Affairs, said:
“We are almost half-way through the year and it is only now that UK workers are finally working for themselves, not the taxman. Tax Freedom Day demonstrates how heavy the tax burden is in this country with high income tax rates, national insurance payments and draconian VAT and stealth taxes, including the newly introduced levy on sugar.
“While the Government has brought the budget deficit down, for all the talk of austerity, progress is still too slow. Reductions in public spending to relieve workers of the burden they are saddled with will allow them to spend more of what they earn, thus providing the economic boost this country needs.”
John O'Connell, chief executive of the TaxPayers' Alliance.
“Brits are very generous, and need little pushing in order to dig deep to causes that matter to them. That's why ever-higher taxes, raised under the pretence of 'asking' people to pay 'a bit more' is so cruel. Taxpayers work longer and longer, only to see their hard-earned money wasted by politicians who don't care a jot for it. It's time we recognised the sacrifices people have to make to contribute such high taxes, and time too for the government to begin lessening this burden by getting spending under control.”
Sam Dumitriu, Head of Research at the Adam Smith Institute, said:
“Tax Freedom Day is a stark illustration of the UK’s tax burden. It is a reminder that public services such as education, welfare, and the NHS must be paid for, either through taxes or borrowing (taxes on the next generation).
“The Chancellor must resist the pressure to declare austerity over and turn on the spending taps. Labour too, must be honest with the public. Their proposed £50bn increase in public spending will inevitably lead to even higher tax burdens on ordinary people.
“Further reductions in public spending will be necessary to allow workers to keep and spend more of what they earn.”
Notes to editors:
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The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.