Tax History

March 14, 2009

The system of taxation has been a part of governance for centuries. According to the records found so far, the society in Ancient Egypt was the first society to adopt the system of taxation. It is widely believed that in Ancient Egypt, system of taxation originated in the very first dynasty of the Old Kingdom, circa 3000 BC- 2800 BC. Documents retrieved from these times reveal that the Pharoah would tour his entire kingdom every two years with the intention of collecting taxes from his citizens. Taxation is also implied in the various receipts from granaries of those times.

The system of taxation is even endorsed in the Bible. In Genesis (chapter 47, verse 24 – the New International Version), it is stated, "But when the crop comes in, give a fifth of it to Pharaoh. The other four-fifths you may keep as seed for the fields and as food for yourselves and your households and your children." In this instance, Joseph is setting down the rules of taxation while explaining the division of crops, whereby 20% of every crop is turned over to the Pharaoh.

In India, the system of taxation is only apparent after the 11th century. The then Islamic rulers of India had imposed a tax on the people, called the jizya. The Mogul emperor Akbar finally abolished this system.

As far as Europe is concerned, the history of taxation records can be traced only as far back as the 17th century. Taxation records show that in countries like France, Scandinavia and the Netherlands, final goods may be been taxed at the high rate of 15%-20%. Due to a large number of wars faced by European countries, the tax rates in Europe also saw a huge rise in the eighteenth and the nineteenth centuries. The increase was perhaps the highest in England, where the tax rate rose by 85% during wartime.

Some systems of taxation have been made obsolete as times keep changing. Here are some of those systems of taxation that have become obsolete over a period of time:

•    Tallage: A tax imposed under the feudal system on feudal dependants
•    Tithe: Payment of a tenth of one’s income or produce to the Church.
•    Scutage: Payment made in lieu of service in the military.
•    Danegeld: During medieval times, when the Danes were known for raiding, Danegald was imposed as a form of land tax to pay off the Danes. Eventually, this amount was later used for the funding of military expenditures.
•    Carucage: This was the form of tax that was created in England to replace the then existing system of Danegald.

Along with these taxation systems that have now gone obsolete, the trend to assign private citizens or groups with the responsibility of creating and collecting taxes has also declined. This trend led to a large number of interesting instances of taxation. For instance, windows, doors and cabinets came to be taxed in order to decrease the consumption of expensive hardware and glass. This led to the increase in hutches, wardrobes and armoires used as a replacement for windows, doors and cabinets.

Here are some other interesting facts about taxation from around the world:

•    During the reign of the Tsar, Russians were taxed for keeping beards.
•    Taxes have been interestingly used to enforce public policy. For instance, people are taxed for vehicular congestion on the roads, thereby encouraging them to use public transport.
•    The most complicated system of taxation in the world today is the German tax system. Believe it or not, the government has to spend 3.7 billion Euros just to collect income tax every year.