Your Money: Many happy (tax) returns!

Two hundred years of income tax may not be everyone's idea of something to celebrate, yet 100 people a day are visiting the Revenue's birthday exhibition. Paul Slade reports
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Indy Lifestyle Online
When it comes to those aspects of modern life worth celebrating, few people would raise a cheer for income tax. But now that the tax has reached its 200th birthday, the Inland Revenue is throwing a party.

Despite its site in the mid-basement level of Somerset House, the Revenue's Bicentenary of Income Tax exhibition is pulling in about 100 visitors a day. Attractions include the Tax Trivia game, and a chance to review all your favourite self-assessment TV commercials.

The exhibition is aimed at everyone, from parties of schoolchildren to tax professionals. Nigel East, one of the organisers, says: "The history of income tax is really just the history of Great Britain, and the exhibition mirrors that. People hate paying income tax, but they do like the things it buys."

Income tax remains - in theory, at least - a strictly temporary phenomenon. It was originally introduced as a means of funding the Napoleonic wars, and must be reinvented by MPs with each year's Finance Act. But that fact only scratches the surface of the useless information on view at Somerset House. Here, then, are Six Things You Never Knew About Income Tax:

l Immoral earnings - The Emperor Caligula levied a tax on Roman prostitutes in a bid to recoup some of his considerable spending on their services.

l Your own business - Concerns about privacy did not start with the sprouting of security cameras in every high street. It was also a real concern when income tax was first proposed. Nigel East says: "Up until income tax was introduced, you could make a huge pretence at great wealth - or, alternatively, you could make out you were penniless. The great fear was that people would see you were a great deal more wealthy than you were letting on, and that your relatives would find out ..."

l Barking mad - UK taxes in the past have been levied on such bizarre indicators of wealth as chimneys, windows, hair powder, servants and dogs. The dog tax, like income tax itself, was first charged around the end of the 18th century as one of a number of efforts to raise money for the ongoing Napoleonic wars.

Nigel East says: "It was all done on the scale of your household. A big house would be expected to have a large number of dogs, just as it would be expected to have a large number of hearths."

Tax assessors had the job of sneaking around potential taxpayers' homes at dead of night. They would then kick loudly on the front door and assess the amount due from the volume of barking within.

l A golden age - For 26 glorious years, between 1816 and 1842, Britain had no income tax.

The tax was repealed by Parliament in the year after the battle of Waterloo to the sound of "a thundering peal of applause" in the Palace of Westminster. Parliament decided that all documents related to the tax should be pulped, though not before copies had been sent to the King's Remembrancer.

But by then, the damage had been done, as income tax had proved a practical means of raising revenue. In 1912, the Conservative prime minister Sir Robert Peel, reintroduced the tax for those with incomes above pounds 150 a year, and it has been with us ever since.

l Face the music - East's prize find for the exhibition is a Thirties' music-hall song called "The Cause of All the Trouble is the Income Tax". It was written by Great Rex Newman and Noel Gay, who describe its tempo as "slow and sad". The final verse runs:

Makes me sick, dirty trick, These income tax officials

are a bit too thick!

I'd a shock, postman's knock.

He said `I've brought your third and final note, old cock',

Down, down, pay cash down,

I paid my first instalment

with my last half-crown,

But it ain't no use to worry,

you've got to face the facts,

The cause of all the trouble

is the income tax.

l War wound - For many British workers, income tax started in 1944, when Pay As You Earn, or PAYE, was introduced.

Instead of collections once or twice a year, tax started disappearing from pay packets before workers had seen the money. Anyone on more than pounds 100 a year was sent a note of their tax code; P45s were introduced for those changing jobs. In the five years to 1944, the standard rate of income tax rose from 29 per cent to 50 per cent, the 10 million people paying tax became 14 million, and the total take rose from pounds 440m to pounds 1.4bn

The man to thank for the introduction of PAYE was Chancellor Sir Kingsley Wood, who dropped dead on the very day that the new system was announced. Good.

`Bicentenary of Income Tax', Somerset House, Strand, London WC2, 10am- 4.30pm Mon-Fri, until 14 Jan. Closed 18 and 24-29 Dec, and 1 Jan. Admission free (0171-438 7890)

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