UK workers celebrated tax freedom day on June 1

Though most people are probably unaware of it, workers up and down the United Kingdom cleared their tax burden on June 1 and began to start earning money for themselves.

Tax freedom day marks the theoretical point in the year at which they stop working for the government. It is calculated by working out the length of time the average UK resident must work from the start of the year to pay off their annual tax burden:

Just as last year, in 2007 tax freedom day falls on June 1.

Overall, the government takes more than 40 per cent of national income, according to the Adam Smith Institute, which calculates the date of tax freedom day.

In working out the tax burden, the institute incorporates the Value Added Tax (VAT), inheritance tax, stamp duty and fuel and alcohol taxes on top of income tax.

However, it is believed UK taxpayers are giving up more of their earnings to the Treasury than they should:

Independent financial advice website Unbiased.co.uk said that analysis of HM Revenue & Customs data showed an average of £160 (about R2,300) wasted on unnecessary tax liability per person each year.

The UK as a whole will lose £7.9 billion (about R113.37 billion) this year in unnecessary tax, according to the figures.

In recent years, tax freedom day has been arriving later in the year – this year's date falls a full week later than in 2002. In the early 1980s, the Conservative government imposed a number of heavy taxes to pay for a restructuring of the British economy, pushing the date back to as late as June 15 in 1982.

In America, where the tax burden is generally much lower than in the United Kingdom, tax freedom day usually falls in May.

Source: Paul Willis, Workers celebrate tax freedom day, Manchester Guardian Unlimited, June 1, 2007.

For text: http://business.guardian.co.uk/story/0,,2093105,00.html

For more on International Issues:http://www.ncpa.org/sub/dpd/index.php?Article_Category=26

FMF Policy Bulletin/ 05 June 2007