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FT: De La Rue banks on cash

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altWritten by David Fickling

“We’re bust and we’re going to make ourselves feel richer by printing money," wrote Eamonn Butler of the Adam Smith Institute.

Published in the FT here.

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BBC: Shorter wait for tax freedom day

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altWorkers in the UK have to work until 14 May to cover all of the tax they must pay in 2009, says a think tank.

This is a shorter wait than last year, when the so-called "tax freedom day" arrived on 22 May, the Adam Smith Institute said.

The average worker must work 134 days in 2009 to earn the money going to the government through income tax, National Insurance, VAT and other taxes.

But factoring in government borrowing extends that period to 176 days.

Recovery

"Running up deficits can be described as a form of deferred taxation," said Gabriel Stein, chief economist at Lombard Street Research who carries out the calculation.

"The effect will be that when the economy recovers - as it will eventually do - the UK tax burden is likely to rise much faster than would otherwise have been the case and tax freedom day is likely to creep later and later in the year."

The calculation also includes outlays such as fuel, alcohol and cigarette duties, car tax, and council tax.

Excluding government borrowing, the day falls earlier than at any time since 1973.

Business failures and rising unemployment means that the government is unable to bring in as much tax revenue, prompting greater borrowing.

The Institute said that the gap between tax freedom day based on actual revenues - 14 May - and tax freedom day based on government spending - 25 June - was the widest it had been since the early 1970s.

The 25 June date was also the latest since 1984.

Published on the BBC here

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Radio Five Live: Wake up to Money

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altClick here to listen to Tom Clougherty discuss Tax Freedom Day on Radio Five Live. (Starts 22:45)

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Celebrate Tax Freedom Day, but...

As of June 2024, this is out of date. Please refer to Tax Freedom Day 2024 for the updated statistics.

Celebrate Tax Freedom Day, May 14 2009

But you'll still have 42 days hard labour to fill Brown's borrowing hole

Tax Freedom Day 2009, the day in the year when the average Brit has earned enough to pay his tax bill, is tomorrow, May 14. That's the earliest date since 1973.

But according to the Adam Smith Institute, who calculate the UK's Tax Freedom Day every year, there is little cause for celebration. If you factor in government borrowing Tax Freedom Day does not come until June 25 – the latest date since 1984.

More worryingly, the gap between these two Tax Freedom Day measures – one representing taxes collected, the other how much the government actually spends – is now 42 days. That's higher than it was at its previous peak in 1975, and may represent the widest gap revenue and expenditure since the Second World War.

The Institute's director, Dr Eamonn Butler, commented:

"Put simply, the government is now living further beyond its means than it did even in the dark days of the 1970s. We might not be paying for it this year, but Brown's borrowing binge is going to mean higher taxes for all of us in the years to come."

For more information please contact:

Dr Eamonn Butler or Tom Clougherty on 020 7222 4995

ENDS

Notes for editors:

  1. Tax Freedom Day shows the total tax paid each year by an average taxpayer, including indirect taxes, local taxes and National Insurance contributions, as a percentage of that individual's total income.

  2. It is calculated by comparing general government tax revenue with the Net National Income (NNI). The total of all government tax revenue – direct and indirect taxes, local taxes and National Insurance contributions – is calculated as a percentage of NNI at market prices. The result is then converted to days of the year, starting from 1 January. In order to factor government debt into the Tax Freedom Day, the Public Sector Net Cash Requirement (PSNCR) is added to the tax revenue.

  3. Tax Freedom Day is calculated for the Adam Smith Institute by Gabriel Stein, a Swedish economist who has lived in the UK since 1990. In 1981 he worked in the Israeli Ministry of Finance. From 1982 to 1991 he ran his own economics and public affairs consultancy, Stein Brothers. He is currently a director of Lombard Street Research Ltd.

  4. More information is available on the Tax Freedom Day web-site: http://www.adamsmith.org/tax-freedom-day/

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MoneyWeek: Tax Freedom Day comes early – but it's not good news

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altWritten by David Stevenson

Happy Tax Freedom Day!

Today's the day when the average Briton has earned enough to pay his annual tax bill. In other words, today you stop working for the Government, and start working for yourself. And the – apparent - good news is that this year, we're enjoying the earliest Tax Freedom Day since 1973.

But before you start popping the champagne corks, there's a very nasty sting - or two – in the tale... The bad news on Tax Freedom Day

This year, it's 'only' taken British taxpayers the first 135 days of the year to pay off their debt to the taxman, according to the Adam Smith Institute, the independent think-tank which crunches the numbers.

Of course, it doesn't work out that way in practice. Employees on PAYE pay a tax slice every month, while the self-employed get saddled with a once-a-year bill. But it's still a useful guide to see how large a slice of our total incomes is being surgically removed by the Revenue. And this year, Tax Freedom Day has actually come at its earliest date since 1973.

So are celebrations in order? Sadly, no. TF Day is worked out on what we actually pay in tax. As the economy tanks, people pay less tax because incomes shrink and unemployment rises. So that's the reason it's early this year – not because the Government has slashed tax rates.

In fact, if you factor in government borrowing (which we'll have to pay for eventually), then TF Day wouldn't arrive until 25th June – which would be the latest point in the year since 1984.

And the real bad news is that this gap between TF Day based on tax take and TF Day based on total government spending is rapidly widening as the government's annual shortfall gets larger and larger. The official gap this year is forecast to be £175bn. In reality, it's almost certain to be a lot bigger.

Published on MoneyWeek here

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Channel 4: Average worker clears tax bill

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altBritons had to work until Thursday May 14 just to earn enough money to cover all the tax they must pay during 2009, research showed.

The Adam Smith Institute said it would take the average worker 134 days to earn the money they would hand over to the Government through income tax, National Insurance, VAT and other taxes.

But it warned that once government borrowing was factored in, people would have to work until June 25 before all Government expenditure had been covered - the worst figure since 1984.

The group said the gap between Tax Freedom Day based on actual revenues and Tax Freedom Day based on Government spending was now the widest it had been since the early 1970s, and possibly since the Second World War.

It added that the June 25 date was also likely to be too early, as the Government's borrowing forecasts were likely to be optimistic, and the actual day was likely to be pushed back beyond the half year mark.

Gabriel Stein, chief economist at Lombard Street Research who calculates Tax Freedom Day, said: "Running up deficits can be described as a form of deferred taxation.

"The effect will be that when the economy recovers - as it will eventually do - the UK tax burden is likely to rise much faster than would otherwise have been the case and Tax Freedom Day is likely to creep later and later in the year."

The group said that although Tax Freedom Day this year was the earliest since 1973, this was only because it reflected the amount of money actually raised through taxes, which have fallen due to rising unemployment and business failures.

It added that the Government's preferences for stealth taxes in the past few years meant it was becoming harder for people to understand how much tax they were paying.

Eamonn Butler, head of the Adam Smith Institute, said: "The average person spends four-and-a-half months of the year working for Gordon Brown. May 14 is the day when we have worked off our tax bill and at last start working for ourselves."

Published on Channel Four here

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Media contact:  

emily@adamsmith.org

Media phone: 07584778207

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