MONEY COMMENT
No More Tax For 2004!

By Cliff D'Arcy
June 1, 2004

According to right-wing think-tank the Adam Smith Institute, Tax Freedom Day arrived two days ago, on Sunday, 30 May.

Tax Freedom Day is a measure of how long a typical UK worker has to work before earning enough to pay off his/her yearly tax bill. The Adam Smith Institute calculates Tax Freedom Day by dividing the total tax bill by the nation's income and then multiplying this fraction by the number of days in the year (note that 2004 is a leap year). This means that all taxes are taken into account, including many stealth taxes that workers often fail to notice.

What all this means is that, theoretically, an average worker worked for the government for the first 151 days of 2004. Another way of thinking about it is to say that 41% of his/her wage (151 divided by 366) goes to the government in the form of various taxes.

The higher the burden on the taxpayer, the later that Tax Freedom Day arrives. Several taxes were hiked last year, including an extra 1% on National Insurance Contributions, so it probably comes as no surprise to learn that Tax Freedom Day arrived three days later this year than it did in 2003. What's more, Tax Freedom Day has advanced by six days since Labour came to power in 1997. In effect, Gordon Brown's nicked a week of our working lives, compared to seven years ago. Yikes!

In the US, Tax Freedom Day arrived on 11 April this year, which means that the typical US worker labours for his/her government for 102 days of the year, which equals a tax take of 28%. Here are the figures for a few other regions:

So, although the Danes and Swedes enjoy excellent national health and social welfare systems, they pay for it by working for their governments for almost three-fifths of the year!

Of course, roughly speaking, the more you earn and spend, the later your personal Tax Freedom Day will be (30 May is merely the average). So, if you'd like to bring forward your own Tax Freedom Day, check out the tips in these articles:

• Prepare To Pay More Tax!
• How To Beat The Taxman - Forever!
• Eight Ways To Pay Less Tax

More: Read the Fool's Guide to Taxes