All taxes gathered by government, whether on personal income, sales, property, corporate profits, international trade or whatever, are eventually paid by a countrys people. Tax Freedom Day is the day of the year on which enough GDP has been earned to meet the countrys tax bills and people start working for themselves. Until then, the nation works to pay taxes with which to sustain government. In other words, Tax Freedom Day is a measure of how much time you spend working for someone elses purposes rather than your own.
If you are happy with the way government spends the confiscated products of your labour you will not worry about the average of 108 days people will have worked to secure their annual emancipation. You may also not be concerned that some of your money will simply have been transferred to others. However, if government has been financing people and activities that are opposed to your own interests, you are likely to be very concerned. You are also likely to object to having your taxes used to pay for the service.
Tax freedom day for the country as a whole is calculated by multiplying the proportion of GDP (at market prices) taken for general government revenue by the number of days in a year and then adding a day to the result. This year tax freedom day for South Africa is April 20.
The Table shows that Tax Freedom Day this year is a week later than it was in 1993 but four days earlier than last year. Government is absorbing more resources than it was a decade ago and the level of spending is excessive for our developing economy. When the developed countries were at South Africas level of development their governments took no more than about 15% of GDP in taxes, which would be adequate to cover governments core functions such as policing, courts, defence, education, and the provision of sound money. Most other services could be provided by private suppliers more efficiently and at lower cost than they are by government. Our Tax Freedom Day should therefore be on or around February 25. The 54 additional days of GDP now taken by government would then remain in private hands and would be directed towards growing the economy more rapidly and providing the needs of consumers more effectively than it is now. Moving toward larger government makes South Africa inefficient at satisfying the desires of its people and takes away their freedom.
Year – Tax Freedom Day
2001 – 20 April
2000 – 24 April
1999 – 20 April
1998 – 16 April
1997 – 16 April
1996 – 13 April
1995 – 16 April
1994 – 12 April
1993 – 13 April
Source: Garth Zietsman, who is a statistician for a major South African bank. The views of the author of this article are not necessarily shared by the members, directors, or staff of the Foundation.
