Mansion Tax – Tax…. evolved?
In the wake of a potential Mansion Tax era, I thought this could be a good time to take a trip through history to see how property tax has evolved through the centuries, and just quite what has been levied in an attempt to collect taxes…
1. Hearth Tax
Hearth tax was imposed by parliament in 1662, as it was easier to establish the number of hearths than the number of heads. The people of England were adverse to the inspections required to enforce the tax by individuals who had no legal authority to enter the properties to check hearths. Some people even stopped up their chimneys to avoid the tax. In 1684, a baker knocked down the wall from their oven in order to use their neighbour's chimney, resulting in a fire that burned 20 homes and killed four people. The tax was repealed 5 years later in 1689.
2. Window Tax
In 1696, King William III introduced the window tax. The charge to tax was based on the number of windows in a building, designed to impose tax relative to the prosperity of the tax payer, but without the controversy that surrounded the concept of income tax. The tax had two very different outcomes. In some cases, architectural design of buildings shifted to minimise the windows in order to avoid paying tax, eventually leading to public health problems. On the other hand, the richest of folk found this a means of distinguishing themselves from the merely rich; purchasing manor houses to maximise the possible use of windows in an exercise of austerity. The tax was eventually repealed 150 years later in 1851.
3. Wallpaper Tax
Wallpaper tax was introduced in 1712 under the reign of Queen Anne. Patterned or printed wallpaper was initially taxed at a current day value of £3.17 per square yard. This tax was easily bypassed by purchasing untaxed, plain paper and then have it altered post purchase. This tax was abolished in 1836.
4. Brick Tax
King George III introduced the brick tax as a property tax in 1784. As the tax was based on the number of bricks used in construction, builders soon started using larger bricks to mitigate their tax position. In response, the government increased the taxation on bricks putting minor brick producers out of business. The brick tax was finally abolished in 1850 as it was considered detrimental to industrial development.
What is interesting about these taxes, especially in today's climate, is not necessarily the attempts to tax property based on it's inherent size in order to collect tax from wealthier individuals, but the extent the tax payer has considered avoiding the tax altogether. It would seem that tax avoidance has been rife for the past 400 years (or, arguably, tax planning in some cases).
Moving away from property, there are other taxes that have been levied in the past that I thought to include to expand on this point further:
5. Playing Cards
A tax on playing cards began under the reign of James I, who passed a law requiring an insignia on the Ace of Spades as proof of a payment of tax. This was taxed as early as the 17th 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.
King Henry I allowed knights to opt out of their duties to fight in wars by paying a tax called 'scutage'. At first the tax was considered reasonable, but when King John came to power and raised it to a rate of 300%, knights were not particularly happy with the idea of not being able to afford to refrain from battle. There are articles pertaining to the excessive rate as one of the major contributions to the creation of the Magna Carta, limiting the King's power.
Pitt the Younger levied a tax on men's hats in 1784. It was designed to be a simple way of raising revenue for the government in a rough accordance with a person's relative wealth. It was supposed that the rich would have a number of hats, and the poor might have one cheap hat or none at all. To avoid the tax, hat-makers stopped calling their creations 'hats', leading to the tax's adaptation to 'headgear' by 1804. Heavy fines were given to anyone milliner or hat wearer who failed to pay the hat tax. The penalty for forgers of hat-tax revenue stamps was death. The tax was repealed in 1811.
Considering these taxes, one might well be thankful that we live in the now, even if on the brink of a major election that could fundamentally alter the way in which certain aspects of modern day income and capital are taxed.
However opposed we are to the implementation of any such tax, as least we can take comfort in the fact that in modern day times, we are hit with a late filing notice. Not an axe.