VAT rise pushes back 2011 British tax freedom day: study

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Britons will have to work three more days in 2011 to pay off their annual tax bill, a think tank said Wednesday, after calculating that "tax freedom day" would fall on May 30.

The Adam Smith Institute forecast that, in effect, everything earned by the average worker for the first 149 days of next year will go to the government's coffers. Its calculation had been for 146 days in 2010.

It said the longer period for 2011 was almost entirely due to the rise in Value Added Tax (VAT), with the sales tax on goods and services being hiked from 17.5 percent to 20 percent on January 4.

Prime Minister David Cameron's Conservative-Liberal coalition government has embarked on a course of tax rises and spending cuts in a bid to rein in Britain's record budget deficit.

"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," said the institute's executive director Tom Clougherty.

"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.

"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," he added.

© 2010 AFP

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