The government's national debt has compromised the timing of 'tax freedom day'- the day when the average taxpayer in the UK has paid off their annual tax bill and starts earning for themselves According to BDO Stoy Hayward, the date fell on 14 May this year, compared with 1 June in 2007, as the actual amount of tax collected during the recession has nosedived. However it is inevitable that this will fall much later in coming years due to escalating government debt. Now BDO recommends that increasing inflation by 1% could help the government reduce the 'conundrum' that is the large deficit for the future. It said that each rise of 1% in inflation would effectively reduce the real cost of this debt - national debt is £774bn- by about £8bn. Although the firm recognises that the government pays £30bn a year in interest payments to service the debt, it suggests the government would benefit more from rising inflation than reducing the levels of spending or increasing taxation. Stephen Herring, senior tax partner at BDO Stoy Hayward said: 'The poor figures for public finances last month emphasise this will be a tough conundrum for the next government; on the one hand, it is tempting to consider that rising inflation reduces the real level of the national debt'. But, Herring warns that if it's not kept track of, inflation can be a ' dangerous' tool: 'One must not lose sight of the need to keep inflation at reasonable levels to ensure that savings and earnings do not lose their value, especially for those on fixed pensions'. He added: 'As well as the current debate between the politicians about public spending, we now need a parallel debate about whether the necessary tax increases will fall upon businesses, individual taxpayers or the consumer'.