Man is free by nature. In the remote past most people were deprived of their freedom and only few could enjoy it. Those few held the rest in bondage and oppression. Those few lived off the rest. Those few had power. Command and control have always gone hand in hand with bondage, therefore human liberation is unthinkable without curbing the cluster of these evils, the State.
The course of human development is the history of man’s liberation. Slaves had no freedom. Their all labour performed 365 days a year belonged to others. Slaves, it is true, were given a shelter and a morsel of bread for the preservation of their lives. In the feudal system serfs acquired more freedom but were shackled by forced labour, corvee. Feudal lords exacted a number of taxes, and a tithe had to be paid for the support of the priesthood. In the late Middle Ages serfs were allowed to work one third of the year on their own land and thus enjoy the benefits of their labour. As mercantilism developed, the gentry forwent the inefficient labour of serfs and demanded feudal land rent in the form of foodstuffs. Over time, however, in kind contributions were replaced with money and deprivation of freedom by way of forced labour eventually phased out.
Freedom deprivation was reduced to the expropriation of the fruits of people’s work. In the narrowest sense, it is a means to deprive people of the time spent creating them. Yet, it is not only hours and days that are taken away. In the broadest sense, the benefits of labour exchanged for money provide us with freedom. Freedom to satisfy our needs and to pursue happiness. The expropriation of wealth makes these prospects fade.
In the course of history people acquired more and more rights. Man’s liberation stimulated progress, whose amount was proportionate to the amount of freedom. The development of society boomed during the rise of capitalism. Yet, when at the end of the 19th century the state began to assume an ever-increasing number of functions, man’s freedom began to decline.
Those who value liberty came up with an idea to calculate how much time people spend working for the government – that is, at what point in the year people stop handing over all their income-in the form of taxes-to the government. If the serf in the Middle Ages knew precisely how many days a year or a week he worked for the lord, people today must know how many days a year they sweat to work off the demands of the state. The first day people begin to enjoy the full benefits of their labour is a great holiday-a holiday that should be celebrated with a glass of champagne and Beethoven’s “Ode to Joy”. For this is not merely TAX FREEDOM DAY. It is a day proclaiming the greatest human value-freedom, a value people have been striving after for centuries.
Tax Freedom Day Worldwide
According to the data provided by the “Impulse” magazine, the taxpayers in Singapore turn to the government every penny earned until March 3. In Spain and Switzerland Tax Freedom Day falls on May 4 and 5 respectively. The average Italian, French and Dutch work until early June to pay the total tax bill imposed by all levels of government. The taxpayers in Sweden have to work more than half a year, roughly until July 2, to maintain their “welfare” state. In the U.S. people cease working for the government on June 10 and in Japan – on June 11. According to the Adam Smith Institute, the earliest Tax Freedom Day in the history of Great Britain occurred on April 29 in 1965. Thirty years later, in 1995, this day fell a month later, on May 28.
Tax Freedom Day in Lithuania
The Lithuanian Free Market Institute has bee calculating Tax Freedom Day for Lithuania since 1993. In 1993 the average taxpayer handed over to the government all his income earned until April 13. In 1994 Tax Freedom Day advanced to April 20, and in 1995 it occurred on April 23. In 1996 people in Lithuania had to work 126 days-until May 2-to pay off their obligations to the government. These data suggest that Tax Freedom Day is moving later in the calendar, showing an increase in public sector spending and making the country’s economy less attractive to foreign and less friendly to home grown entrepreneurs.
The first group to work out a methodology for calculating Tax Freedom Day and to calculate how much time taxpayers spend working for the government was the Fraser Institute in Canada. The Institute has been making these calculations since 1977.
Tax Freedom Day is calculated by comparing a given year’s general government tax revenue with gross national product. To assess the tax burden, all taxes collected are included. These are income tax, inheritance tax and all kinds of indirect taxes, such as VAT, petrol, alcohol and tobacco, stamp duty, vehicle tax, council tax, national insurance, local taxes, etc. The methodology does not include income from penalties and various fees and charges, interest and dividends earned by the government, trade excess and proceeds from privatisation. This is pure “business income”. The total of all government tax revenue is calculated as a percentage of gross national product. The result is then converted to days of the year, starting from January 1.
Comparisons Are Inexpedient
If you compare Tax Freedom Day for Lithuania and those for most of the “First World” nations, you may get an impression that Lithuania can boast more freedom. Is it really so? Apparently, Lithuania is far from a tax haven. It is no secret though that for some people Tax Freedom Day comes in early January, while honest-or less resourceful-taxpayers have to sweat under the tax burden until summer.
Reflecting on Tax Freedom Day, one should bear in mind that the Lithuanian tax system is marked by volatility, non-compliance and corruption. The tax burden does not weigh evenly. Many firms and individuals benefit from complete or partial exemptions. Others tend to keep some transactions off the books to avoid taxes or pay bribes to reduce tax assessments. Some, mainly state-run or formerly state-run, enterprises are “liberated” from paying tax arrears. The large informal sector evades taxes altogether. To offset all this, others have to pay more. Seeking to ease the tax burden for each and every one, public functions and spending must be cut down, and taxes must be made transparent and neutral to the utmost.
When we raise a glass of champagne on May 2 this year, let us think about what each of us could do to make Tax Freedom Day come each year at least a week earlier.