People in the UK will need to work an extra three days in 2011 before reaching their ‘tax freedom’ day.
The Adam Smith Institute has calculated that ‘tax freedom’ day will be 30th May 2011. This is the day when earnings will stop paying for taxes, assuming all taxes are front-loaded at the start of the year.
The extra three days in 2011 compared to 2010 are almost entirely the result of the increase in VAT from 17.5% to 20% on 4th January 2011.
It has been over four years since taxes made up such a high proportion of earnings. Back in 2007, tax freedom day was not reached until 2nd June.
The highest tax burden discovered by this annual survey was in 1982, when tax freedom day was not reached until 22nd June. People spent an average of 172 days working to pay their taxes in 1982.
Whilst nobody likes paying taxes, they are an essential part of funding public services. With a record budget deficit, it is little surprise that tax freedom day falls even later in 2011.
With proper Financial Planning, it is possible to make your own tax freedom day fall earlier in the year. Because the ‘tax freedom’ day is calculated as an average figure, many people will see their own tax freedom day fall even later in the year unless they undertake some form of tax planning.
Image credit: Flickr/alancleaver_2000
