Conservative Home

« Ben Howlett: Today's start-up loans scheme backs young people | Main | Alistair Thompson: Cowardly Clegg - and his attempt to distract attention from his own links to the Murdochs »

Dr Eamonn Butler: It's Tax Freedom Day today. Yes, for almost five months you've been working just to pay taxes.

BUTLER EAMONNDr Eamonn Butler is Director of the Adam Smith Institute. Follow Eamonn on Twitter.

Congratulations! Today is Tax Freedom Day. It’s that point in the year when you finally stop working for the Treasury and start working for yourself. Yes, it’s amazing but true – you work nearly five months of the year solely to pay taxes. You are left with only seven months of the year to provide for yourself.

For 149 days, from New Years’ Day, through the Iran oil embargo, the Arab Spring, the second Greek bailout, the announcement that Encyclopaedia Britannica is scrapping its print edition, the picture of North Korea’s exploding rocket, the $120m sale of The Scream, your whole working energies have been absorbed by the black hole of HM Revenue & Customs – even that extra day of February 29, this being a leap year. You have paid income tax and national insurance on what you earn, VAT (at its new, higher rate) on what you spend, corporation tax on your business, fuel and vehicle duties on your motoring, council tax on your house, stamp duties on your transactions, excise duties on your cigarettes, beer and gambling, inheritance tax on you late mother’s estate, air passenger duty on your holiday flights, climate change levy on your gas and electricity bills, and a lot more besides.

And that 149 days of thraldom to the Treasury, believe it or not, is only the burden suffered by the average taxpayer. If you earn above the average, you pay even more on what you earn; if you have a bigger house, you pay more council tax and stamp duty; if you take longer-haul flights, you pay more on those; and since you probably buy more stuff, you pay more tax on all that, too.

We are actually worse off than mediaeval serfs. In the Middle Ages, serfs had to work just four months of the year for their feudal landlord, whereas we have to work five.

But it gets worse. We are actually paying more of your income in tax than you were last year. Indeed, we have had to work an extra two days this year, in order to meet our tax bills. That is because our income has been squeezed by inflation and recession, while George Osborne has been raising VAT, pasty taxes and various unseen ‘stealth’ taxes in a feeble attempt to balance his books.

And worse still. Our American cousins celebrated their Tax Freedom Day on April 17, six weeks ahead of ours.  In Australia, it came on April 4, meaning that we work nearly eight weeks longer for the tax authorities than the average taxpayer in Oz. I suppose we can take a crumb of comfort from the fact that the French will have to work until July before they have paid off their tax bills, and that with M Hollande now in power, they might have to labour even longer.

But there is worse news yet. Tax Freedom Day only measures the money that the government extracts from us in taxes. But governments, as you know, spend everything they earn from taxes and then as much more as they can get away with – borrowing the difference, and so shoving the extra burden onto future taxpayers. If we take this into account, the total Cost of Government Day would fall nearly four weeks from now, on 23 June. (Last year it fell on 30 June, so Mr Osborne’s ‘austerity’ package has spared future generations some slight burden; but not really very much.)

The Adam Smith Institute has been calculating Tax Freedom Day for the past 25 years, and has figures going back to 1963 – when it fell as early as 10 April. It is the plainest way to show how much the nation pays in taxes – which of course is why the Treasury hates it. When you realise that 40% of the nation’s income goes in taxation – and still more is absorbed by borrowing – you can see just how much the tax burden must stifle people’s willingness to work, invest, grow and spend: all the things we need to get ourselves out of our present mess. And the more obvious it is that to grow our way out of this recession, we need a radical cut in the tax burden – preferably right now.


You must be logged in using Intense Debate, Wordpress, Twitter or Facebook to comment.