June 2nd is a special date for those UK readers who are in the unfortunate position of being onshore, resident taxpayers. June 2nd is the day you stop working for the government. For 155 days of the year, every penny earned by the average UK resident was taken to support government expenditures.
Tax Freedom Day shows just how long we spend working for the Treasury, rather than ourselves. Overall, the government takes more than 40% of national income. This means that the average UK resident has to work a full five months of the year solely to pay that tax bill. Last year, that meant working from 1 January to 4 June – just to pay taxes! The 2008 Budget did little to change that. Assuming the Chancellor got his growth forecasts right, Tax Freedom Day 2008 will fall on June 2 (just one day earlier, since this is a leap year). And if you take government borrowing into account, Tax Freedom Day does not come until 14 June.
For much of the last few years, however, Tax Freedom Day has been coming later and later. In fact, it falls a full week later now than it did back in 2002. That is an extra week of working for the Chancellor. At this rate, it will not be long until we spend longer working for the government than we do working for ourselves.
Tax Freedom Day is calculated by taking the UK’s net national income and calculating how much of that is taken away in taxes. These taxes include not just income tax, but VAT, inheritance tax, stamp duty, car and fuel taxes, excise taxes on alcohol and cigarettes, taxes on companies and employment, and many more. For technical stuff about how Tax Freedom Day is calculated, click here.
The Adam Smith Institute has been calculating Tax Freedom Day since 1991 and has figures for it going back to 1963 – when Tax Freedom Day was more than a whole month earlier, falling on 24 April.
Tags: Adam Smith, offshore banking, tax freedom dayPosted in Cautionary tales and real cases Edit No Comments »
Offshore Numbered Accounts - Myth or Reality?Wednesday, April 23rd, 2008
Just a quick note to regular readers, to inform you that I have set up a number of pages (known as “lenses”) on Squidoo. Squidoo is something comparable to Wikipedia. The point of this is not to so much to preach to the converted like you who are already following my blog, but more to get the word out widely to the unconverted! As such, they don’t go into much detail, but will hopefully encourage people to come here and read more.
Still, I thought regular readers might be interested in checking out these pages. The first of my Squidoo lenses is called “Offshore Numbered Accounts: Myth or Reality?” and can be found at:
http://www.squidoo.com/offshore-numbered-accounts
Enjoy!
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