Quids in today after five months of tax bills

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The Independent Online

Britons going out to work today will finally be earning money for themselves rather the Government, according to the Adam Smith Institute, which has calculated that 3 June is this year's Tax Freedom Day.

The think tank's research suggests that every penny earned by the average worker so far this year will have been eaten up by tax. Put another way, from today forwards Britons are finally making money for themselves.

This year's Tax Freedom Day is three days later than last year and nine days later than in 1997, when the Labour Government came to power.

The accountants BDO Stoy Hayward said hikes in petrol taxes were the most significant reason for this year's later date, though rises in capital gains and corporation taxes had also contributed.

Stephen Herring, a tax partner at BDO, said: "It is not surprising that we are working longer for the Government due to rising taxes as the Chancellor tries to reduce the Budget deficit at the same time as increasing public spending."

Dermot Callinan, a partner at KPMG, added: "The tax burden does seem to be increasing and I would not be surprised if next year's Tax Freedom Day falls even later."

Mike Warburton, senior tax partner at Grant Thornton, said that in addition to new taxes on petrol, the Government was raising more money by failing to offer sufficient increases in the thresholds at which people begin paying higher tax rates.

For example, the higher rate threshold, at which people begin paying 40 per cent income tax, has risen 28 per cent to £33,000 since 1997, although prices have risen by 46 per cent.

"The Government's own figures show that the number of higher-rate taxpayers is now 3.3 million, an increase of 58 per cent since 1997," Warburton said.

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