Tax me if you can

IT SEEMS that creativity knows no bounds when it comes to taxes. At least, when it comes to the British. I had a sampling of this during a trip to Scotland, when the tour guide pointed out that certain windows of old buildings in parts of Edinburgh looked to be blocked. The suspicion is that those buildings had their windows boarded up because of a curious penalty called the window tax.

In 1696, William III imposed the window tax - an early version of the income tax - by imposing a tariff on households based on the number of window each house had. The idea was that larger houses owned by the rich required more windows.

According to the UK National Archives, a house in 1747 with at least 15 windows would be taxed nine pence per window. A rough estimate of a 10-shilling tax bill - with 12 pence making a shilling - meant five days of wages for a skilled tradesman in 1770, according to an online calculator from the UK National Archives.

Soon after, houses got significantly dimmer. British residents started to brick up their windows simply to avoid the tax bill. It would also be no coincidence that new houses started to be built with fewer windows, according to archival records.

Rumour has it that the phrase "daylight robbery" came about as a result of the window tax, as the new income stream for the government of the day led to little sunlight streaming in through the windows. (The true origin of "daylight robbery" is still uncertain, with online articles noting that the first mention of the phrase was only in the 20th century.)

The jaundiced policy was rid of in 1851, after doctors (who probably lived in big houses with several windows) were adamant that cutting out light from households would lead to poor health.

Items meant for consumption came under the taxman's scrutiny as well. There was, for example, the soap tax introduced sometime in the 18th century - a tariff on a composition of fat and alkali. Sensibility and sanitation eventually prevailed in 1853. The soap tax came up against the trend of a burgeoning city increasingly packed with people who could not afford a decent bar of soap. The soap tax was also widely criticised for being regressive. An 1833 article from UK's the Spectator was rightly indignant over this "very unequal" tax.

"For whilst the duty adds two thirds to the price of the coarse soap which the poor man uses, it becomes trivial when levied on the refined and scented soaps of the rich," the article wrote, adding that the tax on the manufacturing of soaps boosted smuggling, and shut out innovation.

"The manufacture of soap is purely a chemical process; yet no improvements have taken place in England from the late extensive improvements in chemistry - the processes and apparatus are essentially the same as they were one hundred years since. But whilst the fair trader is prevented from advancing with the advance of science, fresh discovery facilitates the frauds of the smuggler."

With the early defence of intellectual property (and hygiene) worked to a full lather, the British Lever Brothers were free to develop a new form of soap-making using oils. The company started by the two sons of a grocer is still standing. We simply know it today as Unilever.

The wild attempts at squeezing out tax revenue has not abandoned British politicians. In 2012, the UK launched a "pasty tax" that meant a 20 per cent value-added tax (VAT) on hot takeaway food. The idea was to close the apparent gap for VAT collected on meals eaten at restaurants.

Fans of sausage rolls, pies, and pastries were mortified. And retailers who sold hot takeaways fought back, arguing that the food items were heated up in order to meet health and safety regulations, and not to take advantage of a seeming tax loophole.

The angry puff over the pasty tax swelled as parliamentarians were criticised for their "let them eat cake" disdain for the common snack. The witchhunt escalated as politicians were quizzed on the last time they had a pastry. One tasty gaffe emerged when the last prime minister of UK David Cameron alleged he had a "very nice" pasty in the Leeds train station. Dogged investigation by the British press showed no evidence of said pastry in Leeds.

The Budget proposal was laughably amended at first to apply VAT to food served "at a temperature above the ambient air temperature", except for freshly baked bread. Perhaps having lack the crusty disposition of their forefathers, the government of the day relented that same year to have pasties straight from the oven or cooling naturally to be exempt from VAT.

One takeaway lesson from the vexations of tax is that the electorate has had some enterprising triumphs in outwitting politicians who offered a brand of impractical policies.

It brings to mind a British gentleman who growled in 1947 that "democracy is the worst form of government except for all those other forms that have been tried from time to time". Winston Churchill quoted an unidentified predecessor, and the association stuck with the former prime minister of UK.

But I reckon this original quote is more revealing. Churchill also once said: "At the bottom of all the tributes paid to democracy is the little man, walking into the little booth, with a little pencil, making a little cross on a little bit of paper - no amount of rhetoric or voluminous discussion can possibly diminish the overwhelming importance of that point."

Perhaps the certainty of death and taxes is less dour if we add the spoils of democracy to the list. There are moments through history where political arm-twisting is given pause, if only to consider a little booth and a little pencil. For the little men with the little ideas can get a little cross.