Five months' work goes in tax

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The average British employee will have to work from 1 January to 24 May next year to pay off his or her tax bill, a report out today claims.

Every year, the right-wing think-tank the Adam Smith Institute calculates how long people "slave for the benefit of the Treasury" and comes up with what it calls "tax-freedom day". In 1996 the date was 23 May - but it was a leap year and had an extra day.

The institute's report states: "Nearly 40 per cent of our national income will be swallowed up in taxes in 1997. That means we will work nearly five whole months for the taxman before we can finally start working for ourselves."

Tax freedom day would fall on Saturday 24 May next year, it said. That is more than a week later than the 1993 low of 15 May, but considerably earlier than in 1985, when tax freedom day was 1 June. The tax burden was a lot lighter 30 years ago - in 1965, tax freedom day fell on 29 April.

However, other countries in Europe are worse off. The European Union average for tax freedom is 5 June, while people in Denmark have to work until the end of July just to pay off their taxes, the institute said.

The report states: "The Government is currently, and with some success, attempting to bring the public sector finances back into balance. But this is done partly through higher taxation and only partly through lower expenditure.

"If the higher tax path continues to be chosen, Britain could still end up as a high-tax economy, less attractive for foreign investors and less friendly to home-grown entrepreneurs. Such a trend could only be described as deeply disturbing."