Brussels blog

Happy Tax Freedom Day to our Polish and Danish readers!

Or so says a new study put out today by New Direction, a think tank funded by the centre-right European Conservatives and Reformists parliament group.

Tax Freedom Day isn’t some cooky holiday dreamt up to celebrate taxes or freedom; rather, it is meant to represent the day on which citizens stop working for the government (i.e. to fund their tax bill) and when they start working for themselves. So a 25 per cent tax take equates to a Tax Freedom Day of April 1st, while you need a 43 per cent rate to land on June 7th.

It’s a simplistic model, but it is invariably a big deal in the US, where it was dreamt up in the 1940s by low-tax precursors of today’s Tea Party movement.

The New Direction study, compiled by Institut Economique Molinari in Brussels, suggests that the EU-wide Tax Freedom Day is coming up this Saturday, or 44.23 per cent of the way into 2011. That’s a day later than last year, mainly because of assorted VAT tax hikes enacted to plug gaping budget deficits.

See the country-by-country breakdown after the jump:

• March 13 Cyprus

• April 16 Malta

• May 10 Ireland
• May 17 Luxembourg
• May 17 United Kingdom
• May 18 Bulgaria
• May 19 Spain
• May 29 Portugal

• June 3 Slovenia
• June 7 Poland
• June 7 Denmark
• June 10 Czech Republic
• June 11 Estonia
• June 12 Greece
• June 12 Finland
• June 15 Slovakia
• June 17 Netherlands
• June 19 Lithuania
• June 22 Latvia

• July 1 Italy
• July 1 Romania
• July 10 Sweden
• July 11 Germany
• July 23 Austria
• July 26 France
• July 29 Hungary

• August 4 Belgium

Of course, this is a gross simplification: people pay different levels of taxes within a country, depending on their salary, benefits and so on. And the exercise is only as good as the data used.

For comparison, the US Tax Freedom Day has for the past five decades fallen around mid-April (this year is April 12th).

It’s interesting that the first most lightly-taxed countries are the EU’s only four island states – Malta, Cyprus, Ireland and Britain – though landlocked Luxembourg has caught up with the Brits since last year.

But beyond that there are few clear trends: there is no chasm separating the core and the periphery, nor Old Europe vs. New Europe, nor is it immediately obvious which tax regime leads to higher growth.

See the data summary at the bottom of the study for methodology guide.