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History of Income Tax

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Income tax is a vital source of funds to any government. Money raised by taxing the working population can be used to fund infrastructure development as well as improving the standard of living in the country. United Kingdom was the first the country to establish a working income tax on its civilians in 1799. Initially implemented as a temporary source of income to fund the war to beat Napoleon, income tax is now an essential source of revenue for the government all over the world. This report will look at the significance of income tax in the UK since the late 18th century, through World War 1 and World War 2, and how it has evolved into the tax system, currently in practice. Income tax still remains as a temporary tax, and must be …show more content…

Even though Sir Robert Peel was not in favour of income tax, he introduced income tax again in his Budget of 1842 that was considered to be one of the most famous in the 19th century. Peel taxed people earning above £150, this resulted in favour of the less wealthy people. Also under custom duties there were 1200 articles, of which Peel reduced 750 articles on his budget. His taxation plan was on action for a period of three years. But it was extended for another two years due to an increase in the national expenditure, and also to help the national railways because the railway industry had less money. When cheaper imports were available, Corn Laws were created which is a tariff on imports. This helped the local farmers as they had a competitive advantage, but Peel repealed the Corn Laws. This made him loose support of his party. William Galdstone and Benjamin Disraeli had complete authority during the second half of the 19th century. From the year 1853 to 1866, William Gladstone was elected as the Chancellor of the Exchequer. Gladstone did not follow Peel’s method of income tax policy; instead he wanted to terminate it. He also believed that government spending should be kept to a minimum level. Gladstone reduced the income tax exemptions from £150 to £100; he thought that if more people pay then there would be a huge pressure form the public to repeal the tax. But in order to fund the Crimean war, Gladstone

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