This year‘s Tax freedom day fell to June 1 according to analysis of the F. A. Hayek Foundation and Slovak Taxpayers Association.
After last year, when Tax Freedom Day fell on June 1, Slovaks will this year work for the state a little longer. It is caused by slight increase in economic redistribution by the government. Compared to the last year, Slovak citizens will celebrate tax freedom about a half hour later. Main reasons are gradual slowdown of the growth of the Slovak economy and government consolidation measures in the public finances.
Tax Freedom Day, represents the day, in which the average citizen earned enough income to pay his annual tax burden. Thus, if the overall tax burden would represent fifty percent, citizens would be working first half of the year for the state and second half for themselves and their families.
According to the F. A. Hayek Foundation, total redistribution rate in Slovakia in this year is 41.71% of gross domestic product. This means government redistributes nearly 42 cents of every euro generated in Slovakia. In comparison, last year redistribution rate was 41,68%.
Converted to the working days, this means that until June 3, Slovak citizens submitted all their earnings to the state and from about 10:30 in the morning, they are already beginning to work for themselves and their families.
F. A. Hayek Foundation and Slovak Taxpayers Association have been calculating Tax Freedom Day in Slovakia since 1999. It represents the day citizens on avarage stop working for the government and begin working for themselves and their families. This is simple, straightforward way to demonstrate stete‘s burden on its citizens.
The Tax Freedom Day shift to the detriment of taxpayers was caused by following factors:
- Slowdown of economic growth of the Slovak economy. Economic redistribution is measured by the share of consolidated government expenditure on gross domestic product. This year’s slower economic growth combined with a increase in consolidated government expenditures contributed to the higher rate of redistribution and pushed Tax Freedom Day closer to the end of the year. Calculations are based on current forecast of GDP growth published by the National Bank of Slovakia, which assumes Slovak economy will grow by 0.7% GDP.
- Government consolidation of public finances. In the long term, objective of a balanced budget is very important. Consolidation measures on the revenue side, however, pose a risk of further damping already slowing growth of the Slovak economy. The rate of consolidated government expenditure this year will rise again even if the government manages to reduce the public deficit this year as planned.
We emphasize that compared to the past years, in which multiple warnings of our analysts were confirmed (e.g. deficit threat), we included in calculating Tax Freedom Day some potential risks of public finances in a very conservative manner. Given the high degree of uncertainty, the real Tax Freedom Day could fall even more in the expense of the taxpayer than our conservative calculation shows.
Translation: Tomas Zemko