Today (May 28) is Tax Freedom Day, the first day of the year when the average taxpayer in the UK stops paying for the state and starts working for themselves, and this year its falls two days earlier than it did in 2013.
Tax Freedom Day is calculated by libertarian think tank the Adam Smith Institute (ASI) and one of its founders, Dr Eamonn Butler, has written an open letter, published in most newspapers, saying that, while the Chancellor should be congratulated for liberating taxpayers two days earlier in 2014, there is still more to be done.
Dr Butler says that the Government must make the tax system more transparent and understandable by radically simplifying the tax code and that it must reduce the tax burden on workers by cutting unnecessary spending and using the savings to reduce the size of the state. He concludes that it is high time ordinary people saw the rewards of their hard work going into their own pockets, not the taxman’s.
He goes on to argue that taxes should be lower both because the private sector tends to allocate resources less inefficiently than the state and because state spending on public services crowds out private sector innovation.
However, while many economists agree that, on paper at least, it is good news that taxpayers in 2014 get back two days’ worth of tax compared with last year, they argue that the tax regime is so burdensome and complex that the ‘bonus’ days are likely to go unnoticed by most taxpayers.
Meanwhile, the Treasury has kicked up a storm by claiming that voting for independence could mean that workers in Scotland achieve “tax freedom” two weeks later than their counterparts south of the border. They argue that this is because Scotland would have a higher deficit than the UK, leaving taxpayers working for longer before they could reach the date.