The process of taxation has been imposed on billions of taxpayers for many years, but for how long? Let’s take a step back in time and see how taxes have changed throughout the ages.
Taxation in Ancient Egypt?
That’s right! The first known taxation to take place was over 5,000 years ago in Ancient Eygpt (about 3,000BC). Records show that the Pharoh would tour around the kingdom, collecting one-tenth (tithe) of peoples financial income. There were also records of granary receipts on limestone flakes, papyrus and other crops.
The Persian Empire
Moving forward by a mere 2,500 years, and you will find a more sustainable and regulated tax system, introduced by Darius the Great. This system was tailored to a provincial governor (Satrapy) who would collect the taxes and send it back to the treasury. There were around 30 Satrapies during this time, collecting due amounts for:
- Gold produced in India
- Food supplied to the Babylonian army
- Crops produced in Egypt
After the failed invasion of Greece in 480BC, Persia’s lands started to diminish dramatically. This led to much heavier taxation among their people, which caused the fall of the Persian Empire later in 330BC.
The Rise of Taxes in Europe
During the 17th Century, there was a huge trend in taxes across Europe. France was particularly notorious in changing tax rates throughout this period resulting in some interesting results in Government expenditures and revenue:
- 1600-1610: 24.30 million livres
- 1700-1710: 1.6 billion livres
Taxation on the production of goods also increased up to 20% across France, the Netherlands and Scandinavia during this period.
This was also the Century of the “window tax”. Introduced in the UK, the tax was determined by the number of windows in a property, and the subsequent bricking up of those windows by landlords, resulting in the tax being referred to as “daylight robbery”.
18th & 19th Century
The 18th and early 19th centuries saw Europe involved in many wars, which led to a huge increase in taxes. The greatest tax increase was recorded in England at 85% during this time.
In an attempt to restore its financial status after the Seven Years’ War and American Revolutionary War, France imposed some very unpopular taxation schemes. They were heavily regressive and was one of the main reasons why the French Revolution started in 1789.
The practise of citizenship-based taxation in the US dates back to 1861 when the United States was struggling to raise revenue for its Civil War.
Taxes in the 20th and 21st Century
The 20th Century, and the two world wars, saw many governments resorting permanently to income tax as the preferred means to raise revenue. Previously, income taxes had largely been seen as “temporary” taxes to balance the books. The retention of income tax and the ability to withhold taxes at source would see government funding increase significantly alongside the development of larger government, the wealthfare state, social security and the NHS.
Most countries in the world today have a tax system. Most scale taxes are based on annual income from individuals or corporations. Other taxes that countries could impose includes:
- Inheritance Taxes
- Estate Taxes
- Gift Taxes
- Property Taxes
- Wealth Taxes
- Sales Taxes (VAT)
- Payroll Taxes
With a globally mobile workforce, governments have to consider the ease with which individuals and companies can move their bases. Equally, ex-pats have to be aware of the multitude of taxes they may face in any jurisdiction they move to. We know too well the impact on those with Dual Citizenships, the troubles that can bring since the US started taxing citizens in 1861.
Taxation in the Future
Tax rates will always continue to change depending on the economic status of a country. If you look at the United Kingdom, we anticipate potential tax rises could happen to capital gain tax rates, restrictions on the non-domiciled regime and fuel duty, to name a few. Alternatively, we could see tax rates fall n 2021 after we leave the EU to increase our competitiveness in Europe. Other events such as wars, economic crashes and political party changes can also affect the way people are taxed in the future. The historic trend, however, has been for higher taxes and larger government.
Time will tell how governments will resolve tax issues related to the large tech companies, the gig-economy, and the advent of AI and robotics taking over jobs that would have previously have generated income tax.
Need help with the history of your taxes?
Here at Ingleton Partners, we have over 35 years of combined tax experience. We have the knowledge to help and support your financial affairs and provide sustainable solutions. Whether you need to be tax compliant or are dealing with taxes from a different country, our professional services will be able to take the heavy burden off your shoulders.