It's Income Tax time - Know how Income tax was started and some interesting facts
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We all pay income tax to the government. But, How many of us know how it started?
Below are the less known facts and history about Income tax
- The first income tax is generally attributed to Egypt
- Taxes were introduced to raise funds for wars
- In the early days of the Roman Republic, public taxes consisted of modest assessments on owned wealth and property. The tax rate under normal circumstances was 1% and sometimes would climb as high as 3% in situations such as war. These modest taxes were levied against land, homes and other real estate, slaves, animals, personal items and monetary wealth. The more a person had in property, the more tax they paid. Taxes were collected from individuals.
- In the year 10 AD, Emperor Wang Mang of the Xin Dynasty instituted an unprecedented income tax, at the rate of 10 percent of profits, for professionals and skilled labor
- One of the first recorded taxes on income was the Saladin tithe introduced by Henry II in 1188 to raise money for the Third Crusade
- The inception date of the modern income tax is typically accepted as 1799, at the suggestion of Dr Beeke, Dean of Bristol. This income tax was introduced into Great Britain by Prime Minister William Pitt the Younger in his budget of December 1798, to pay for weapons and equipment for the French Revolutionary War.
- The highest rate of income tax peaked in the Second World War at 99.25%. It was then slightly reduced and was around 90% through the 1950s and 60s. Tax revenues as a percentage of GDP for the U.K. in comparison to the OECD and the EU 15. In 1971 the top rate of income tax on earned income was cut to 75%.
Some Funny Taxes
- In Ancient Egypt, cooking oil was taxed, and on top of that, people had to buy their taxed cooking oil from the Pharaoh’s monopoly, and were prohibited from reusing previously purchased oil.
- Pecunia non olet or Money doesn't stink! is a Latin saying. During the 1st century AD, Roman emperor Vaspasian placed a tax on urine. The buyer(s) of the urine paid the tax. The urine from public urinals was sold as an essential ingredient for several chemical processes e.g. it was used in tanning (not exactly sure how), and also by launderers as a source of ammonia to clean and whiten woolen togas etc. Therefore, those who obtained valuable urine from collectors were charged a tax.
- During the Middle Ages, European governments placed a tax on soap. It remained in effect for a very long time. Great Britain didn't repeal its soap tax until 1835
- The French had a salt tax called the gabelle, which angered many and was one of the contributing factors to the French Revolution.
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