If you get annoyed about how much of your earnings are swallowed up in taxes then May 27 is your day to celebrate Tax Freedom Day.

This is the day when the average British wage earner starts taking his or her money home rather than handing it over to the government, according to calculations by the Adam Smith Institute.

The institute uses the calculations to illustrate how much of our money is spent on taxes.

The average wage earner would have to work every day, including weekends and bank holidays from January 1 to May 27 to pay the tax bill for the year.

This includes income tax as well as indirect taxes such as VAT, capital gains tax, inheritance tax, council tax and duty charges on petrol, alcohol and tobacco.

"When the figures are presented in this way it is really quite alarming," said Dr Eamonn Butler, a director of the Institute.

"The aim of Tax Freedom Day is to show ordinary taxpayers exactly how much of their money ends up with the government.

"Taxpayers spend nearly half their time working for the government, and only half their time working for themselves."

The Institute has been working out the Tax Freedom Day for the past 10 years.

Worse lies ahead

Despite more than 10 years of political commitment to a "low tax economy", Tax Freedom Day falls later in the year than it did a generation ago.

Time to celebrate...?

This means ordinary employees are spending more time working for the government and less time working for themselves.

This situation is not about to improve. By the year 2002 Tax Freedom day will be two days later, according to the institute.

This is mainly due to the government's commitment to continue increasing duty on petrol and tobacco and its decision in the June 1997 budget to abolish tax credits.

Maurice Fitzpatrick, a tax specialist with accountants, Chantrey Vellacott said: "Tax Freedom Day may only be a couple of days later, but it is a movement in the wrong direction for most people.

"Most people are unaware of how much of their money the government takes in indirect taxes.

"The changes in duty charges and the abolition of tax credits are broadly equivalent to adding 7p on the basic rate of income tax."
 

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