Which is the first country in the world to pay income tax?

Income tax is imposed by governments on income created by all individuals who come within the law of that country. Income tax includes almost everything a person earns – salaries, dividends on investments, savings accounts, rents, etc. A monthly payment for professionals like lawyers, doctors and authors is also included under the ambit of income tax. The money raised by collecting income tax is used by governments for public welfare activities and for offering citizens better services. The income tax rate varies in different countries. From ancient times, taxes were collected on property, inheritance, harvest and trade. In ancient Egypt, the people were owned by the Pharaoh and most taxes were collected by means of work or in kind. For the craftsmen and peasants, the tax was based on the productivity in the year. The temples in Egypt were also levied certain amounts as tax. In China, Emperor Wang Mang instituted a tax on income for professionals and skilled labor but it did not last for long. In Rome, custom duties were levied on imports and exports. Caesar Augustus, a tax strategist, instituted a 5% tax on inheritance. The revenue collected from this tax was used a retirement funds for the military. There was also a sales tax of 4% for slaves. The Athenians in Greece imposed taxes to raise funds for war expenditures. Once the emergency was over and additional resources were gained by the war, refunds were made out to the tax payers. A rare case indeed! In Great Britain, a tax on income was introduced by Henry II to raise money for the Third Crusade. The income tax rate was a tenth of their income and movable property. However, the first important income tax was imposed in 1799 to raise monies for the Napoleonic Wars. Even in the United States, income tax was first collected to fund the Civil War in 1864. European countries, Japan, Australia and New Zealand implemented income tax in the second half of the 19th century. However, 1799 is widely accepted as the beginning of modern income tax. In 1799, William Pitt’s government introduced income tax to fund the war against France. This system was devised by William because of the high expenditure of war. The British were not only spending on the armed forces, also on the subsidies offered to the allies. The money raised was used for weapons during the wars against Napoleon Bonaparte. The income tax rate on 60 pounds was 0.8333%, while an income of over 200 pounds was taxed at 2.5%.
Income tax is basically a modern-day system of taxation. The income tax rate is different for ranges of income. The amount is assessed based on the difference between earned and unearned income. There are several things considered in this form of taxation – economy, expenses, accuracy in receipts and profits, transparent accounts, reliable records and a systematic form of society.


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