Taxation has been around for nearly as long as there have been societies. An organised culture has usually had a ruler at the top, and long before these rulers needed money for social provision, they needed it for war, building palaces, or simply claimed it as their right.

Some of the earliest known taxes were levied in Ancient Egypt between 3000 and 2800BC. The pharaoh would undertake a tour of his kingdom and collect taxes, which were payable on almost any kind of economic activity, including on grain and cattle. Some taxes were due in the form of labour. The pharaoh sometimes needed money for wars and would collect this tax whenever necessary. Crucially, the money was not simply for war: it was also because the pharaoh was due it as the incarnation of Horus – namely, it was his right to take money from his subjects.

Rome also made good use of the idea of taxation. Its conquered territories were subject to especially heavy taxes (something imperial powers have done many times since) and the tax-collectors, often bemoaned in the New Testament, were greatly resented: not just for taking monies due to Rome, but for enriching themselves in the process. Rome was a sophisticated empire, and although much of its tax revenue was used to pay for war and the maintenance of its army, some would have been spent on viaducts, roads and other civic buildings. Rome also had something of a fiscal crisis under Diocletian (284-305 AD), who levied a land tax on Italians (which had not been done for hundreds of years) to try and raise more money.

In the Middle Ages, European peasants suffered greatly from their lords and masters demanding money. The people of England had to pay a tax (Danegeld) to the Vikings for the privilege of having been invaded. People had to pay 10% of their earnings to the Church, called a tithe. Knights, higher up than peasants in the feudal system of the time, but below barons, could pay taxes in order to avoid military service.

However, the tax most people are familiar with, income tax, was a later invention. It had been used briefly in China by the emperor Wang Mang, but first became a regular tax in Britain in 1798. At the time, Britain was trying to defeat Napoleon and guarantee its status as the most powerful of European nations. But there was not enough money to pay for the military forces involved. So the prime minister, William Pitt the Younger, created a law which said that if you earned more than £60 per year, you had to pay 2p directly to the government on each pound. If you earned £100 per year, you would pay 2p on every pound over £60 – so you would pay 80p – or six shillings and eight pence. If you earned £200 a year or more, the rate increased to 24p in the pound – 10%.

This type of tax is known as a progressive tax: the more you earn, the more you pay. It is designed to affect the most well off more. Other types of tax, such as purchase taxes, where a percentage of the price of goods is paid in tax, are known as regressive taxes – everyone pays the same percentage, so the least well off are worst hit.

Today, most industrialised countries have a variety of taxes paid by their citizens, with income tax usually the most significant. Throughout history, the services provided by rulers were limited to defence. It was not until the nineteenth century that modern social provision: pensions, education, healthcare or welfare payments began to be discussed seriously and in some places implemented. These provisions cost vastly more than can be raised by one-off taxes, or than can be afforded by the private sector alone. The only way that a government can afford these services is to levy a variety of taxes.

Of course, there are differences from country to country and even within countries – such as the existence of private education – but look at some figures. The UK government spent around £620 billion in 2008-2009; the US government spent $5000 billion in 2007-2008.

Of the British government figure of £620 billion, a great proportion of that was spent on social provision: health (£109 bn), education (£63 bn), welfare (£135 bn) and defence (£44 bn). Remember this is the spending of a nation of 60 million people, hardly the largest country on Earth.

These figures are gigantic. The five richest people on the planet have a total wealth of around $180 billion. Even a small country like Britain could, therefore, not be financed privately. For the social provision needed to prevent poverty, cure diseases or spread learning, only general taxation can possibly raise the sums needed.

Tax, therefore, is not going away anytime soon. Seeing the tax going out of your paypacket does not always make pleasant reading, but it really is the only way to pay for the things you and your children need.

Author Bio: Bruno is a web entrepreneur and social media marketing consultant working for the Norwegian dog community website Hundefeber.no. He also owns a lovely Pomeranian and a Mops dog.

Category: Finances
Keywords: finances,finance,money.tax,taxation,income tax