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Tax rises and The Anarchy

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Whilst you were hopefully in the garden this Bank Holiday weekend, the financial papers were in overdrive talking about the potential significant tax rises which, if they are to be believed, lurk just around the corner.

I have previously talked about this speculation here and I personally believe it would be a mistake for the Government to be looking at significant tax rises in the short term.

However, something did catch my eye over the weekend.

Peter Hargreaves, he of Hargreaves Lansdown fame, has urged caution in the media saying that such tax rises could lead to the wealthy people he knows in simply moving overseas (albeit, he was quick to point out, he wouldn’t be one of them.)

This capital flight is something which raises its head on a regular basis when tax rises are mooted. We have certainly seen it each time the rules for non-doms have been tweaked, for instance.

But this is an argument as old as the hills – or should that be the foothills of the Himalayas?

I have recently been reading The Anarchy: The Relentless Rise of the East India Company by the excellent William Dalrymple.

As a sad tax person, certain paragraphs have caught my eye and one of these seems quite appropriate:

“The [East India Company’s (“EIC”)] emissary, Venetian adventurer Niccolao Manucci, who was now living as a doctor in Madras, replied that the EIC had transformed a sandy beach in to a flourishing port; if Da’ud Khan was harsh and overtaxed them, the EIC would simply move its operations elsewhere. The losers would be the local weavers and merchants who earned… through trade with the foreigners. The tactic worked.”

It appears that many of the same arguments about tax were being put forward in the early part of the 18th Century. If you try and tax the so-called ‘wealth-creators’ then they may leave and take livelihoods with them. Some might say in the case of the EIC, that would not have been no bad thing!

However, perhaps if that is a case of ‘history repeating’ hopefully the following methods of tax collection will not come back into vogue:

“…By the 1720’s Bengal was providing most of the revenues… and to maintain the flow of funds… became notorious for the harshness of his tax collecting regime. Defaulters among the gentry would be summoned to the… new capital… and there confined without food or drink. In winter, the Governor would order them to be stripped naked and doused with cold water…suspend [them] by the heels and [beat] the with a switch. If this did not do the trick, defaulters would be thrown in to a pit which was filled with human excrement…”

Hopefully, I haven’t given HMT any ideas!*

*Nb – there are those that argue that some of treatment dished out to loan charge victims by  HMRC is perhaps a modern equivalent of the Bengal poo-pit. I couldn’t possibly comment.

 

If you have any queries or comments on this post, or tax matters in general, then please do get in touch.

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