Wednesday 28 October 2015

Let me tell you a little about the history of tax, and tax avoidance...

Many people wonder why tax is used by government, and how it influences the masses (that’s us). Well, rather than launching into a semi-political, tax based rant I thought I’d share with you some of the more unusual taxes in British history and a little of the effects that they had on society. Some even demonstrate the very earliest attempts at that most dreaded of past times “Tax Avoidance”...
  1. King Henry I allowed knights to opt out of their duties fight in wars by paying a tax called “scutage”. At first the tax wasn't high, but then King John came to power and raised it to a rate of 300%. Some claim that the excessive tax rate was one of the things that contributed to the creation of the Magna Carta, which limited the king’s power.
  2. Oliver Cromwell placed a tax on Royalists, who were his political opponents, taking one tenth of their property. He then used that money to fund his activities that were aimed against the Royalists.
  3. Playing cards were taxed as early as the 16th century, but in 1710, the English government dramatically raised taxes on playing cards and dice. This led to widespread forgeries of playing cards to avoid paying taxes. The tax was not removed until 1960.
  4. In 1660, England placed a tax on fireplaces. The tax led to people covering their fireplaces with bricks to conceal them and avoid paying the tax. It was repealed in 1689.
  5. In 1696, England implemented a window tax, taxing houses based on the number of windows they had. That led to many houses having very few windows in order to avoid paying the tax. Eventually this became a health problem and ultimately led to the tax’s repeal in 1851.
  6. In the 1700’s, England placed a tax on bricks. Builders soon realized that they could use bigger bricks (and thus fewer bricks) to pay less tax. Soon after, the government caught on and placed a larger tax on bigger bricks. Brick taxes were finally repealed in 1850. Also a tax was imposed on printed wallpaper. Builders avoided the tax by hanging plain wallpaper and then painting patterns on the walls.
  7. England introduced a tax on hats in 1784. To avoid the tax, hat-makers stopped calling their creations "hats", leading to a tax on any headgear by 1804. The tax was repealed in 1811.
  8. In 1789, England introduced a tax on candles. People were forbidden from making their own candles unless they obtained a license and then paid taxes on the candles they produced. The tax was repealed in 1831, leading to a more widespread popularity of candles.
  9. In 1795, England put a tax on the aromatic powders that men and women put on their wigs. This led to a dramatic decline in the popularity of wigs.
  10. Salt was a very popular thing to tax because consuming it is necessary to humans. The British placed a tax on salt, and the salt tax gained worldwide attention when Ghandi staged nonviolent protests against it. I wonder if Jamie Oliver’s “Sugar Tax” would garner the same reaction.
As you can see, taxation has been a tool used by government to either control the actions of its populace, or benefit from the popularity of a particular product or activity. Similarly, there have always been those prepared to take the best advantage of the situation to reduce their exposure to tax. Really, very little has changed in attitudes to tax over the last 900 years…