Tax Freedom Day in Scotland could move back two weeks under independence
28 May 2014 12:04 PM
Taxpayers in an independent Scotland could face
working even longer before reaching tax
freedom.
As
the UK reaches the Adam Smith
Institute’s ‘Tax Freedom Day’ Treasury analysis
reveals that, in an independent Scotland, Scottish taxpayers could have to work
for an additional two weeks to reach this milestone.
Calculated by the Adam Smith Institute, Tax Freedom Day
is effectively the date whereby the average person in the UK stops paying tax
and starts working for themselves. This year it falls on 28
May.
However, independent experts such as the IFS have
estimated that in 2016 to 2017 – when the Scottish government proposes
independence – Scotland’s deficit will be £1,000 per head
higher than for the UK as a whole.
If
this hole in the public finances was to be filled through tax increases rather
than spending cuts, Treasury analysis shows this would be equivalent to just
over two extra weeks paying tax before reaching Tax Freedom Day. This would put
Tax Freedom Day on June 13 this year.
Speaking ahead of the launch of a major analysis of the
fiscal benefits of being part of the UK, Chief Secretary to the Treasury, Danny
Alexander, said:
As
Scotland’s deficit would be £1,000 per head higher than the UK
average in 2016 to 2017, taxpayers in an independent Scotland could face
working even longer before reaching tax freedom.
The
Treasury will today publish the most comprehensive analysis of the fiscal
position of Scotland yet produced, which will set out the scale of the UK
Dividend for Scotland.
The
Adam Smith Institute determines the UK’s Tax Freedom Day
by:
- calculating general government tax revenue as a
percentage of Net National Income at market prices
- converting this percentage (41.1% this year) to days of
the year, starting from 1 January
If
general government tax revenue was £1000 per head higher, this percentage
would increase from 41.1% to 45.4% and Tax Freedom Day would move to 13 June
(16 days later).