The 10 most stupid taxes... ever

Gordon Brown may have admitted recently that the 10 pence tax fiasco was a “mistake” that “stung” him, but such tax blunders are certainly nothing new. From the window tax of the 18th Century to the Poll tax of the 20th Century, history is littered with examples of bizarre, ill-thought out, rash, excessive or just plain stupid taxes. Sometimes governments just don't know best.

Here are Times Money’s top 10 most stupid taxes... ever.

1. Early 1000s: Heregeld

Lady Godiva's legendary ride naked through Coventry was perhaps one of the most effective anti-tax demonstrations in history. Her tyrannical husband, Earl Leofric, had imposed an oppressive tax called the Heregeld to pay for the King’s bodyguard.

After pleading with him to repeal the tax, Leofric replied: "You will have to ride naked through Coventry before I will change my ways". So Godiva took him at his word – after ordering the town to close all their windows and doors, she rode through the town with only her long golden hair as her cover. True to his word, Godiva’s husband repealed the hated tax.

2. 1773: Colonial taxes

The Boston Tea party was not a party, but a demonstration against the unfair taxation of colonies. The British Government gave the British East India Company, an English trade company, far more beneficial tax arrangements than its colonial competitors.

Demonstrators in Boston became particularly fed-up with this, and one night a group of protestors sneaked onboard a docked British East India Company ship and unloaded 45 tons of tea (worth an estimated £10,000  - that is about £953,000 today) into the sea. The event ultimately helped spark the American Revolution and the loss of America to the British Empire.

3. 1696: Window tax

Ever wondered why some old or listed buildings have their windows bricked up? When William III reigned, a new tax was imposed on houses with more than six windows to help pay for the wars in Ireland and on the continent. Homeowners with bricked up windows would have undoubtedly suffered dark rooms and poor ventilation but many considered that preferable to paying up. The tax was not repealed for 51 years.

4. 1995: Illegal drug tax (USA)

On January 1 2005, Tennessee joined 23 other states in imposing a tax for possession of illegal drugs. People who bought drugs had 48 hours to approach the Department of Revenue and pay tax. It was levied per gram - $3.50 for marijuana, $50 for cocaine, and $200 for meth and crack cocaine.

Drug buyers did not need to provide identification to pay the tax and it was illegal for revenue employees to report them. In just 18 months, Tennessee has collected nearly $2.7 million in revenue – although it is thought this came mainly from drug users who were arrested and found not to have paid the tax.

In July 2006, a judge decided the tax was unconstitutional and it was scrapped.

5. 1988: Removal of Mortgage Interest Relief

This was partly precipitated by a blunder by the then Chancellor, Nigel Lawson. In his budget, he announced that in less than five months time, he was ending double mortgage interest tax relief, which was a major subsidy to mortgage borrowers at the time.

This led to a surge of people buying a home to take advantage of the tax relief. One year later and interest rates had almost doubled to 15 per cent, crippling homeowners and leaving many facing repossession.

6. Late 1970s: The 98 per cent tax rate

During this period there was a 60 per cent top rate income tax and then an "investment income surcharge" of a further 15 per cent. There was no incentive to increase profits because virtually everything was taxed. It led to high levels of non-compliance and lots of avoidance, and was abolished by Nigel Lawson in 1984.

7. 1689: Tax incentives for gin production

Anyone familiar with Hogarth’s engraving, Gin Lane, will understand the implications of this tax blunder. William and Mary, the protestant monarchs who ruled between 1689 and 1702, discouraged the importation of brandy from the Catholic French and instead promoted the local production of gin by abolishing taxes and licensing fees.

Unfortunately, the affordability of gin made it a favourite drink of the poor, and soon lead to mass drunkenness, vice and poverty. Government attempts to reintroduce the tax only lead to a proliferation in the making of illegal - cheap and poor quality – gin. Finally, in 1751, the Tippling Act allowed for reasonable prices, taxes and regulation of production.

8. 1700s: Scottish whiskey tax

The Scottish government applied ever increasing rates of taxation on malt and whiskey in the early eighteenth century. Distillers were driven underground, making smuggling a standard practice for 150 years.

By 1777 only eight licensed distilleries were paying taxes, while 400 unregistered stills were thought to operate within Edinburgh alone. By the 1820's around 14,000 illicit stills were being confiscated every year - suggesting more than half the whisky consumed in Scotland was “illegal”. Finally, in 1823 the Excise Act was passed, which sanctioned the distilling of whisky in return for a license fee of £10. Smuggling died out almost completely over the next 100 years.

9. 1990: Poll tax

This hated tax, set by local authorities, ended up being much more expensive than first thought – and eventually up to 30 per cent of people in some areas refused to pay. This culminated in the poll tax riots – 200,000 protestors attended Trafalgar Square on March 31 1990 – and ultimately to the downfall of Margaret Thatcher. It was replaced by council tax in 1993.

10. 1783: Hat tax

Prime Minister William Pitt added an excise duty to hats in 1783, costing retailers £2 a year in London and 5 shillings in the country. Duty was collected by means of a stamped ticket fixed to the lining of the hat.

A national debate ensued about what forms of headgear were classed as a "hat" – so in 1804 the statutory definitions were recast to include every description of hat by whatever name it was known, and almost every material from which it could be made. It wasn't until 1811 that the tax was repealed.

List compiled by Lauren Thompson with thanks to Andrew Jupp and George Bull

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Comments

[Osher Kazarnovsky]

Mark M (from 14th October 2008). Yes.

[Aaron]

Window tax was actually a rather admirable tax, one that favoured civil liberties. It replaced Hearth Tax, which had required tax collectors to enter homes forcibly in order to assess the number of fireplaces. By changing it to a measure that could be counted from outside the house, it was a check on arbitrary government intervention, reinforcing the principle that an Englishman's home is indeed his castle.

[K Wells]

The community charge was not a stupid tax, it was a tax stupidly enacted. All persons using local services should contribute to their cost.

[Will]

The remark about Cherie Blair doing a Lady Godiva has just completely put me off my dinner - thanks!

[Harish]

During the British Raj there was lovely ways of raising money for Her Majsties Government...one of them was Salt taxes...well worth looking into. Another tax was gamble on wheat and cricket match with the locals.

[Frank Upton]

The top rate of income tax in the late 70s was 83%, not 60%, so that with the investment income surcharge we had a combined rate of 98%.

[tone]

Wasn't income tax introduced as a "temporary measure"? Once a government starts taxing something, they will only give it up if they can get more revenue from another source. One of Brown's many tricks.

[Bananaman]

There was no such thing as a "Scottish government" in the 1700s apart from the first 7 years, so how could it have been a "Scottish Government" that "applied ever increasing rates of taxation on malt and whiskey (sic) in the early eighteenth century"?

It was the Westminster government that ratcheted up the taxation leading to huge resentment of the union. And as others have pointed out, it's "whisky", not "whiskey".

[peg]

How about the "shoe tax" in the US?
http://thehill.com/the-executive/retailers-fighting-imports--shoe-tax-2008-09-11.html

[Anil Suri]

India in the days of the very wise Jawaharlal Nehru and the even wiser Indira Gandhi came quite close to Point 6 in the list, with a 90% tax applicable to income above a certain level.

So high rose the level of black money in the country that in the mid-70s, the 1000-Rupee note (the highest denomination available and, hence, the preferred one for stashing away illegal cash) had to be banned overnight, in order to force the hoarded money out!

[colin Brady]

Insurance Premium Tax - what on earth is the logic behind that?

[Mark M]

Wasn't the increase in VAT in 1991 just to pay for the £140 we all got off our Community Charge bills? Do you think the Treasury will get round to reducing VAT back to 15 per cent at some point?!

[Peter]

RE Ashley's comment on the poll tax "Poll tax or community charge - the stupidest people involved were the protesters - I hope they are all enjoying their council tax bills ..."

Ashley, you obviously missed the entire point of the anti-poll tax campaign. It was not to get lower tax bills or avoid tax, it was intended so that those who were asked to pay were those who could most afford it, inevitably meaning that such people (like myself) had to pay more in order to have pooer people pay less.

It is called a "progressive taxation system".

.....also The Times standards are really falling, spelling Scotch Whisky with an 'e'.

[Samuel]

Actually, the tax on illegal drugs (a stamp tax) exists more to allow for other avenues of prosecution. It can be easier to prove tax evasion than other crimes.

That's what we go Al Capone on, remember?

[Stuart]

Don't they teach you to spell at The Times?

[A. Cameron]

Be glad you don't live in Wallonia in Belgium. Here we have an annual tax on car radios (hardly an option these days) and on having a TV set - not receiving programmes, mind you, just for having the set. This money goes towards paying a lot of idle bureaucrats to sit on their fat behinds and do nothing at all productive during their lifetimes.

[Brian Annesley]

8. 1700s: Scottish whiskey tax

Scotch Whisky is made in Scotland

Irish Whiskey is made in Ireland

Is the rest of the Times as

inaccurate ?

[Lisa]

The Russians introduced beard taxes (to try to suppress religious nutters)

[Peter]

Intersting that 2 of the top 10 from the Tories hit the poorer of society and the only Labour one hit the extremely rich.
You should slipped in the over 100% increase in VAT by Maggie Thatcher and Fuel Tax under John Major.
Don't forget to remind evryone, that despite all the 'stealth' tax we still pay less tax now than we did under the last Tory government.

[M E Jermy]

Item 6 doesn't add up because the top rate was in fact 83%, not a mere 60% as quoted. When the bolsheviks are in charge they always tax highly, waste the money and leave the Tories to sort out the problem afterwards. UK was bankrupt before Thatcher, and an economic world power again in 1996. Since then, however..............

[Harshal Kulkarni]

this is really a nice article on Taxation. Keep going.

[Occasional Ostrich]

Re. tax #8, the Scots do not make "whiskey"

Posted by: Nobby Clark | 2 Oct 2008 09:54:19

Ooh, yes, they do. They just don't know how to spell it; just ask an Ulsterman, Jock.

[BrummyDoug]

Re Boston Tea Party.
The view that this was simply a protest against Taxation reflects a triumph of propaganda over fact by the Revolutionaries.
Expecting colonists to contribute to the cost of their defence seems reasonable; abscence of representation is difficult to justify however.
But the Colonists had other grievances - British hostility to slavery, and British treaties with Indian tribes blocking colonial expansion Eastwards, and the threat to the profits of wealthy tea smugglers; none of which seem terribly admirable in hindsight.

[Ashley]

Poll tax or community charge - the stupidest people involved were the protesters - I hope they are all enjoying their council tax bills ...

[Robert Hitchcock]

9. 1990: Poll tax

The Poll Tax dates from at least 100 years prior to this. I think you mean "Community Charge".

[Robert Hitchcock]

8. 1700s: Scottish whiskey tax
Since when has Scottish whisky been spelt with the "e", this signifies Irish, Anerican, Candian, and Japanese whiskey.

[Not a Scot]

@Nobby: Who cares? Seriously...

[Dave]

You left out Selective Employment Tax (SET) - the dumbest tax ever!

[Nobby Clark]

Re. tax #8, the Scots do not make "whiskey" - they make "whisky".

[Jonathan]

"mortgage interest tax relief which was a major subsidy to mortgage borrowers"

Please stop printing this basic error. Any tax relief is a reduction of the subsidy paid to the Government.

[Hugo Quickly]

Wonder if Cherie Blair would have ridden naked in protest against Government taxes? Come to think of it, I'd rather pay the taxes.

[Laura Roberts]

VAT, come on surely!

And the congestion charge. Yes, you too can speed up your journey by an average of 3 minutes across London, get charged every time you move your car in the morning into a residents parking bay (even 50 metres), and have all your friends say "no.. why don't you come to us again, we don't want to have to pay to get into town".

[Joao]

Very nice list. I'll add that Peter the Great taxed souls and Nero taxed urine...

[TaxBad]

God, there have been so many stupid taxes, it must have been hard to narrow them down to ten. More recently, Alistair Darling's changes to CGT must have been a contender?