Monday, June 1, 2015

Tax Freedom Day was yesterday

So, yesterday was the day on which we stopped working for the government. Put another way, as the Adam Smith Institute does:
Brits work 150 days of the year solely to pay taxes; every day from 1st January to 30th May.
That is, in fact, a day longer than we worked in 2014 and a month longer than they do on the other side of the Pond, where Tax Freedom Day was on April 24.

There is a little bit of good news:
Cost of Government Day, which represents Total Managed Expenditure as a day of the year, falls on 29th June, three days earlier than it fell in 2014. While this suggests a slight improvement over last year, the money borrowed to cover the month-long gap between Tax Freedom Day must eventually be paid off with future taxes.
Those tax cuts are badly needed for the economy and before anyone tells me that tax cuts will mean the government will not be able to afford the great many things it tries (very badly) to run, I may say that it is high time we re-thought what ought to be the state's competence.


  1. Tax Freedom Day was reported in the Telegraph, but I didn't spot Cost of Government Day. In my callow youth I read a book of speeches by Enoch Powell, called 'Income Tax at 4s/3d in the Pound'. 4/3 then was about 22p now. Leaving aside thresholds and allowances, our current level is lower than Powell's proposal, and Powell's idea was at the time considered laughably unattainable. I suppose that represents progress. However, Powell's 4/3 left no PSBR (as it was called then), whereas the Cost of Government Day, as you say, demonstrates a huge, and growing, deficit. No progress after all.

    1. When you say it is worth about 22p now, are you allowing for inflation and various other considerations or are you simply transposing it into present day money?

    2. John ShakespeareJune 2, 2015 at 4:54 PM

      Well, no. The current value is irrelevant; we are talking about relative, not absolute values. As a proportion of a pound, 4/3 is about the same as 22p. Obviously nowadays there would be a lot more 22ps as there would be a lot more pounds, but the proportions remain constant. And I didn't say 'worth'.

    3. So really this was just a way of introducing Enoch Powell's name into the discussion. Well, I have no objection to that even if I don't share some people's uncritical adoration.

    4. John ShakespeareJune 3, 2015 at 5:37 PM

      No; it was simply to demonstrate that things have changed--at least in appearance--since the 70s. Back then it was thought unfeasible and even revolutionary to propose such a low tax rate. If anyone had thought of Tax Freedom Day back in the 70s it would have been far later in the year. Now there seems nothing strange or revolutionary about a 20 percent rate. I know we are carrying an enormous deficit. I know there are other stealth taxes. And I know the deficit is concealed by smoke and mirrors. But even so, we have experienced a considerable fiscal culture change, which I thought worth mentioning. I am not an uncritical Powell adorer, though I admire many things he said and did, not least his (joint) resignation from Macmillan's Treasury team in protest against overspending. That protest was probably one of the factors which has led to the present acceptance of relatively low rates of income tax.

    5. Powell's and others' resignation was entirely admirable as it was on a matter of political principle - not that common then and hardly ever noted now.

      I agree there had been a change in the culture though I don't think it has gone nearly far enough. For that we have to thank Thatcher and her Chancellors.