Date of ‘tax freedom day' is latest for 40 years

Times

a day ago

The tax burden on workers is greater than at any time over the past 40 years and is likely to rise to a record level within three years, according to a free-market think tank.
The Adam Smith Institute says 'tax freedom' day falls on Thursday, six days later than last year and 20 days later than before the pandemic. It has not been this late in the year since 1985 when the Thatcher government was attempting to rectify the disastrous public finances after the economic crises of the 1970s.
Tax freedom day is a symbolic indication of how long into the year the average person would have to work to pay their annual tax bill, with all money earned thereafter going to themselves.
The think tank says that under government tax and spending plans, tax freedom day in 2028 will not arrive until June 24, which would be its latest date. That would make the tax burden higher than it was during the Second World War or the Napoleonic Wars.
It adds that tax freedom day could fall more than halfway through the year as soon as 2030 unless the government changes course, meaning taxation will exceed 50 per cent of net national income for the first time.
This year, the 'cost of government day', which factors in borrowing as well as taxes, is July 22, the latest date since the pandemic.
The think tank has also released data showing the extent to which the tax burden is being shouldered by the rich. It reports that in the last tax year, the top 1 per cent of earners paid 28.2 per cent of total tax liabilities with the top 10 per cent paying 60.2 per cent.
It noted: 'With their share of liabilities steadily increasing over the last 25 years, many wealthy taxpayers are leaving the UK altogether.'
The think tank predicts that Britain is on course to lose a greater proportion of millionaires than any other country over the course of this parliament, 'raising questions about the viability of our current tax regime'.
James Lawson, the chairman of the Adam Smith Institute, said: 'Britons are now working nearly half the year just to pay taxes — and the burden is only getting heavier. A tax system that consumes 162 days of our working year is simply not sustainable. It stifles our economic growth, productivity and our long-term prosperity.
'What's even more alarming is that, unless we reverse course, the UK is on track for taxes to swallow more than half of national income by 2030. This would take us beyond anything seen even during the world wars or the economic crises of the 1970s, raising profound questions about the nature of our economic model.
He added: 'Politicians from all parties must ask themselves whether they want a country where work is penalised, innovation suppressed, and families see more of their income swallowed by the
state each year. If we are serious about turning around our stagnant economy, we must start
by cutting taxes.'
Sarah Coles, head of personal finance at the investment platform Hargreaves Lansdown, said the freezing of income tax thresholds was where most ordinary people were paying more tax.
She said: 'Last tax year, there were 37.7 million taxpayers, and we handed over an eye-watering £301.9 billion in income tax — up 10 per cent in a year and up 37 per cent since 2021-22. The pain is far from over, because these thresholds are frozen until 2028.'