Tax freedom day is here for Britain

In 1900, public spending as a proportion of GDP was 14 percent. Today it's 45 percent.

The Commentator
On 30 May 2011 10:42

Britons have something to celebrate (if that’s the right word). Today is Tax Freedom day, the first day in the year that everything they earn, they keep.

As the Adam Smith Institute (ASI), one of Britain’s leading bastions of free market thinking, notes: “We've worked for a full 5 months this year to pay [our] taxes, with every penny earned in the UK between January 1 and May 29 taken by the taxman to support government expenditure”.

This year’s Tax Freedom day comes three days later than last year due to a VAT hike.

But in a sense, that’s the good news. The last Labour government left Britain’s public finances in such a parlous state that “UK income taxpayers would need to work for nearly a year and a half (525 days) - with their entire wage packet going to the government, and not a penny being spent on public services – to pay off the national debt,” the ASI said.

The ASI calculates its figures on the basis of all public sector taxes, including duties and council tax.

Public spending in Britain as a proportion of gross domestic product (GDP) has risen dramatically since the beginning of the last century. In 1900 it was just 14.1 percent of GDP and hovered around that level until World War I. In 1914 it was 15.6 percent of GDP rising to 25.7 percent the following year and 56.6 percent in 1918.

Through the 1920s it dropped back but, due to the increasing amounts of expenditure on civilian projects, to nowhere near pre-war levels. Through most of the 1930s it hovered just below 30 percent of GDP before spiking to over 70 percent by 1945, this time due to World War II.   

Once again, the post-war years witnessed a decline but not to pre-war levels.

From the 1950s it was oscillating between 35 and 39 percent before breaking the 40 percent barrier in 1966.

It held above 40 percent until the effects of the Thacther reforms finally brought it back into the 30 percents in 1987. The figure stayed below 40 percent of gross domestic product until 2009, following massive public expenditure increases by the Labour government and the effects of the financial crisis.

Last year, public spending as a proportion of gross domestic product was just under 45 percent.

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