A brief history of taxes

Nothing is certain except death and taxes”. 

Benjamin Franklin is widely credited for penning the famous quote in a 1789 letter. While this was some time ago, taxes have been a part of human history for far longer than Franklin’s time. Today, we’ll explore the origins of taxes, and how they have evolved over time. 

In ancient Egypt, the Pharoah collected a tax equivalent to 20 per cent of all grain harvest. During this time, Egypt was without coined money, so grain was a tangible currency that could be collected and redistributed. 

Many other early examples of taxation were a means of funding wars or in other times of economic emergency. Let’s take a look at some of the types of tax we’re familiar with today and explore how they came into being. 

Sales Tax

Ancient Rome administered a sales tax. Julius Caesar was the first to implement a sales tax: a 1 per cent flat rate applied across the entire Empire. Under Caesar Augustus, the sales tax was 4 per cent; still considerably under the 20% VAT in the UK today. 

Income Tax

Ancient Roman Emperor Augustus changed the tax system in the late 1st century BCE. The collection had originally been done through “tax farmers” who collected taxes from their respective regions based on the assessment of the region as a whole and turned them over to the government.

This system was tough to continue, and Augustus switched to a direct taxation system that resembled an income tax. This began as a direct tax on an individual’s wealth, but when it was clear this too was difficult to execute, the income tax replaced that collection.

Property Tax

In ancient times, property taxes were levied in Egypt, Persia, and China. Originally, these taxes were based on the production value of the land, or how much the plot was expected to yield in goods, and therefore were typically paid by farmers. Property taxes continued in Medieval Europe under William the Conqueror in England. Famously, Lady Godiva rode a horse through the streets naked in protest of the property tax rate her husband was forced to pay.

Inheritance Tax

Inheritance taxes originated in the Roman Empire and funded the pensions of veterans, levied at a rate of 5 per cent on inherited property. The inheritance tax as we recognise it evolved from the “relief,” a payment made in the Middle Ages to a feudal lord when a fief was transferred to an heir at death.