Today is tax freedom day!
Taxpayers worked 149 days for HMRC this year, according to free market think tank the Adam Smith Institute (ASI). This is the latest Tax Freedom Day has fallen since 1995, showing the increasing tax burden on households.
UK Taxpayers will pay £734.1bn to the Treasury this year in tax this year, 40.94% of net national income. Leading conservatives such as Home Secretary Sajid Javid supported the ASI’s call to cut tax burden for ordinary Britons and ensure Tax Freedom Day comes earlier in 2020.
This year the ASI estimated that every penny the average person earned for working up to and including May 29th went to the taxman—from May 30th onwards they are finally earning for themselves. It said that the tax burden was going ‘in the wrong direction’, and called on leadership contenders to commit to reducing the tax burden. Conservative leadership candidate Sajid Javid stated that “simpler, flatter, lower taxes” should be a priority for the government and that they both “good economic sense” and are “also the right thing to do.”
Tax Freedom Day in the UK is well over a month later than in the USA, where this year it fell on April 16th, down from April 19th the year earlier.
The ASI singled out three tax changes that it believes would boost growth:
– 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.
– Slash corporation tax to no more than 12.5% to induce job creation and higher wage growth.
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.”