Hearth tax, when it was introduced, was a revolutionary policy in terms of scope and implementation. Most of us British citizens aren’t aware of such a historic tax policy that shaped the modern policy process. With tax always a complicated matter, governments and officials always like to keep a track of historic successes and failures.
There were some precedents to the hearth tax policy. Prior to 1662, tax collection was done by the royal crown and wasn’t very uniform from what is known to us today. Uniformity and process scheduling were two aspects that the hearth tax system brought about. But what does it all really mean?
Basically, hearth tax means – a tax on every hearth and stove present in each home in Great Britain. The reason for the emergence of this policy was, as is similar with most cases, a shortfall in government revenue. A shortfall that was so severe that an overhaul of the property tax regime was considered.
The British parliament in 1662 was looking to raise an annual revenue of GBP 1.2 million through tax policies. As a result, it decided to tax every citizen a fixed amount; the very definition of tax today. Citizens whose property’s worth was less than 20 shillings would pay 1 shilling annually for each hearth they possessed, whereas citizens with more than 20 shillings worth of property would pay 2 shillings annually for each hearth they possessed.
Additionally, this was the first time private tax collectors were employed to handle the administrative complexity of the policy. Under the new tax regime, tax could be collected up to twice in a year, something that wasn’t the case before. Documents for tax purposes were structured, fixed and categorized into two categories – assessment and returns, and exemption certificates.
The hearth tax policy led to a radical shift in the assessment, calculation, administration and collection of tax. Modern Britain still imbibes traces of the forgotten policy in its tax policies.