MercoPress. South Atlantic News Agency

Uruguayans on average have to work 128 days a year to pay their taxes

Tax-free day in Uruguay this year arrives on 8 May

Uruguayans on average work 128 days, over a third of the year to pay taxes, according to a report from a local lobby group based on the “Tax-free day” which supposedly marks the end of the time dedicated to contribute to the treasury.

“We continue to work over a third of the year to pay taxes” according to Gianni Gutierrez a tax and fiscal expert who helped with the report. The ‘tax free day’ basically measures the ratio between the country GDP (total of goods and services) and the total volume of taxes paid. “This is a more graphic way of measuring fiscal pressure than a percentage of GDP”.

Under the system Uruguayans supposedly started on January first to work exclusively to pay their taxes, and the day that contribution is reached (this year May 8) is Tax free day, when individuals begin working for their own assets.

The taxes item in Uruguay includes all possible taxes (income tax, VAT, etc), city and town levies; contributions to the national pensions and welfare schemes plus the balance sheet results (negative or positive) of public utilities which in the country are state monopolies (fuel, energy, waterworks, telecommunications) and establish their own rates.

For example this year Tax free day came five days earlier than in 2012 because the energy company UTE reduced losses to 0.3% of GDP. UTE which generates most energy from hydraulic dams suffered considerable losses because of lack of rainfall in 2011 and 2012, but is now recovering.

There is another catch: goods and services produced in the country are catalogued as Net Domestic Product, NDP, meaning ‘all goods and services produced in the country plus depreciation of private and government capital”. In the case of Uruguay fiscal pressure was estimated at 35.1% of NDP, equivalent to 128 days. In money terms it meant each Uruguayan on average paid 2.786 dollars.

The idea of the Tax-free day was created by the US Tax Foundation and following its method of work can help to establish comparisons. In this case the Uruguayan local lobby picked 26 countries and Uruguay rates somewhere in the middle.

However the numbers and percentages must also be contrasted with public opinion’s perception of how efficient are the services rendered by the State: security, health, education, etc.

Of the 26 countries chosen, seven are ahead of Uruguay: India reached the ‘tax-free day on March 14; Australia, 7 April; US 18 April; South Korea and Ireland, 23 and 24 April; South Africa, 5 May; Switzerland 6 May; (Uruguay, 8 May); Bulgaria, 18 May; New Zealand, 21 May; Brazil, 25 May; UK, 30 May; Japan, 3 June; Denmark, 6 June; Czech Republic 9 June; Canada, 11 June; Spain, 12 June; Slovakia, 20 June; Holland, 27 June.

In July, Israel celebrates on the 9th; Sweden, Germany and Argentina, 13 July; Turkey, 14 July and France on July 26; the last in the list, Belgium, 8 August.