Employees will have to work 149 days this year just to pay their taxes – three days longer than last year.
‘Tax Freedom Day’ is May 30 – after that any money earned belongs to the taxpayer.
Until then, every penny earned by everyone in the UK goes to the taxman as income tax, national insurance, VAT and other direct and indirect taxes, according to independent think-tank the Adam Smith Institute.
VAT hikes to balance government overspending and bailing out the banks in the credit crisis are the main reasons for the taxman picking up the extra earning days this year.
In the past 12 months, VAT has increased from 15% back to the standard rate of 17.5% and then up to 20% on January 4.
VAT hikes mean everyone works longer for tax freedom
Tom Clougherty, executive director of the Adam Smith Institute, said: “As well as hitting every household in the country, the VAT hike is going to dent consumer confidence and put a dampener on our economic recovery – as the Office of Budget Responsibility has already pointed out.
“The government is right to give priority to cutting spending and plugging the deficit. But as Tax Freedom Day shows, Britons are still desperately overtaxed. The fact that we spend almost five months working for the state – and only seven months working for ourselves and our families – is a shocking indictment of big, wasteful government.”
The institute is urging the government to cut some taxes to encourage economic growth.
Lower, flat rate taxes would be fairer for everyone and would raise more cash, suggests the think-tank.
The Treasury’s Office of Tax Simplification is already reviewing more than 1,000 tax reliefs and allowances with a view to streamlining more taxes that are rarely claimed or too complex for individuals and businesses to understand.
Meanwhile, HM Revenue and Customs is also warning taxpayers who have to file a self-assessment return that the January 31 deadline is fast approaching and failing to lodge a return means an automatic £100 fine.
