By Gavin Jones
It’s said that the only two certainties in life are death and taxes and who can argue with that. Monarchies, democracies, dictatorships and indeed all systems of government have relied on passing laws which allow them to extract as much money as they can from their citizenry with the least amount of fuss and the most justifiable reasons for doing so. The ancients did it and it continues with as much ’creativity’ now as yesteryear. Income tax was first levied in Britain in 1799 by British Prime Minister, Pitt the Younger, in order to finance the Napoleonic Wars. Needless to say, this was to be a temporary measure. Quite.
Governments since then have employed the ‘services’ of accountants and lawyers to conjure up all sorts of additional money-grabbing ideas: inheritance tax, capital gains tax and value added tax, being but three. The first metamorphosed from Death Duties, Capital Transfer Tax and now Inheritance Tax, but in reality the end result is the same. It means that in Britain on one’s death, the state helps itself to 40 per cent of the value of one’s estate over £325,000. You work for years to accumulate wealth, paying tax along the way, and you’re taxed yet again on your demise as a final hurrah. Nice money if you can get it and the British government certainly ‘gets it’. There are certain allowances over and above that amount, but I won’t elaborate here.
Capital Gains Tax is another smash and grab by the state which in essence charges the same punitive percentage of any gain made on the sale an asset on the difference between its sale and purchase. Value Added Tax is something which has meant that an organisation in effect becomes an unpaid tax collector for the state by charging a certain amount on the goods it sells, deducting the amount that it’s charged in turn by other companies which supply goods and services and handing over the difference to the state.
I hasten to add that I’m not an accountant, but I trust you get the gist. It’s obvious to many that accountancy can be a sure-fire path to wealth and happiness. On this particular subject, it certainly seems to be the case with international tax ‘experts’ constructing vehicles for extremely wealthy individuals and conglomerates to in effect pay little or no tax whatsoever on their profits. Their fee rates are stratospheric. The wealthy nations of the world have recently agreed some sort of blanket tax reform but whether or not this will prove workable in practice is another matter. I rather suspect that it won’t and that individual countries will bend the rules to suit themselves.
Closer to home, Cyprus has become equally creative when it comes to taxation issues and has become somewhat of a safe haven with its attractive rates. Doubtless some of the money that arrived on the island as a result of the discredited passport for investment ‘scheme’ escaped the beady eyes of various governments and hence those concerned avoided paying tax.
As a final flourish, the following is surely up there in the pantheon of creative tax-gathering and it just so happens to be in my own backyard. A couple of days ago, I received an invoice from my local communal board for the princely sum of €20: cemetary (sic) tax. It advised that the proceeds collected will be used to purchase an area of land for burial plots. Let’s be clear here. The cemetery doesn’t yet exist and yet they want money for its creation at an indeterminate time in the future. Whatever next? Perhaps I should be billed for my consumption of air, to be based possibly on my water bill. Now that IS being creative….