Strike the shackles from your wrists. Tomorrow, on Anzac Day, you will become free! April 25 is Tax Freedom Day.

Every year The Centre for Independent Studies calculates the day when Australians will finally finish paying for the government’s spending for the year so they can start to use the money that they earn for themselves. This is “Tax Freedom Day.”

A hundred years ago, Tax Freedom Day fell on 24 January. At the outbreak of World War II it fell on 26 February. By the late 1950s it had extended to 19 March, and it shifted into April during the Whitlam years. By 1998-99, Tax Freedom Day had been pushed out to 21 April. Last year it was 23 April. This year it’s another two days later than that. That’s another two days spent paying for the government rather than working for ourselves.

CIS Social Research Director Peter Saunders says: “The reason Tax Freedom Day this year falls two days later than last year is that total tax revenue has increased by 8% – much faster than the growth of the economy.”

“Most of this increased tax revenue went to the Commonwealth Government. It collected 9% more in personal income tax, 13% more in income tax from superannuation funds, and 19% more in income tax paid by companies. The Government denies we are over-taxed. But it has been taking a bigger share of the nation’s output every year for the last four years, which is why it has such huge budget surpluses. It’s time they returned these ‘surplus funds’ to the people who earned them.”

The CIS tells us Tax Freedom Day is calculated by dividing total per capita tax revenues by GDP per head. According to the Australian Bureau of Statistics, total per capita taxation across all levels of government in 2004-05 came to $13,781 (see ABS, Taxation Revenue, Australia, 2004-05 Cat. No. 5506.0). GDP per person in 2004-05 was $44,171 (ABS Australian National Accounts, December 2005, Cat. No. 5206.0). This means taxation absorbed 31.2% of GDP, or 114 out of 365 days of the year. The 115th day of 2006 is 25 April.

Peter Fray

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