The Origins of Tax
Early forms of taxation, represented by levies made on goods and wealth by rulers, can be found in Ancient Egypt. Pharaohs imposed particular taxes on materials like cooking oil, and used taxation as a way of asserting control over merchants and the spread of wealth within their empire. A similar approach was taken in Ancient Greece through the Eisphora, which was predominantly levied as a temporary tax during wartime. Anyone paying tax would receive a refund following a victorious campaign. In Ancient Rome, tax became one of the ways of reaping the benefits of the Empire and citizenry, from customs and excise, through to imposing inheritance tax to support military families, and sales taxes. The more formalized, but also frequently abusive taxes made on Roman colonies, particularly in Britain, were the source of rebellions between the Romans and their subjects.
In Britain, the Roman use of taxes was revived by the Anglo-Saxons through the Saxon Danegold, which was made on land and property. It’s important to note, though, that only the very wealthy or merchants with extensive trading systems were subject to taxation. With the poor and serfs excluded, tax revolts came from noble rebels affronted by what they viewed as unfair taxes for wartime missions. The controversy surrounding efforts to impose consistent income taxes largely relegated taxes to emergency measures for wartime and colonial expansion until the 19th century, when the costs of running the British Empire, and the Industrial Revolution, helped standardize new tax systems.
Debates over income tax and emergency tax were key factors in the 1800s, from the controversial Corn Laws, imposed as a means of raising the price of domestic goods, through to tax on stamps. The duties demanded on imports and exports in Colonial America had already contributed to revolutionary action during the 18th century. To this end, income tax remained relatively small in terms of who it covered, although Government deficits by the turn of the 20th century meant that the Treasury had to increasingly depend on taxing citizens.
World War One produced new spikes in emergency taxes, while the Income Tax Act of 1918 looked towards setting up more standardized taxation - bodies like the Inland Revenue, and Customs and Excise departments, were also well established by the 1910s. World War II marked another turning point for raising revenue, with income tax rates reaching 41 per cent of earnings over £50,000 at one point. PAYE taxes were introduced in 1944 as a way of collecting income tax from wages, with everyone receiving a tax code - this was initially limited to anyone earning over £100 a year - about £3000 today.
New tax measures, and the settling of income tax through PAYE, was joined in the post-war era by National Insurance, pensions, and the expansion of the welfare state, with more tax credits and changes to personal allowance bands. International tax laws were also developed to facilitate foreign exchanges and sales, while Corporation and Capital Taxes were introduced by the 1960s, as was VAT in 1973. Today, the British tax system continues to be a vital political and economic tool, with the Conservative Government reducing taxes and cutting public spending, and the status of tax bands and business allowances affecting international changes and the cost of living for everyone.