Interview: Dominic Frisby – How tax shaped our past and will change our future
Author Dominic Frisby tells Tom Herbert about his new book in which he argues that tax affects every area of our lives and is responsible for many of the biggest problems faced by society today.
There is a tax story somewhere near the heart of almost all of humanity’s defining events, from Mary and Joseph to the moon landings, and over the centuries almost every conceivable item has been subject to taxation, from windows to wigs and from flour to fireplaces.
However, as author and comedian Dominic Frisby lays out in his new book Daylight Robbery: How tax shaped our past and will change our future, the taxation background behind many of these stories are forgotten – often to society’s detriment.
In the book, Frisby, who has covered tax and financial matters before in successful Edinburgh festival shows, argues that many of the problems we face today can be traced back to our system of tax.
So is our system fit for purpose? If not, what can be done? And are taxes the price we pay for a civilised society or merely a form of theft? AccountingWEB caught up with Frisby to discuss these questions and more.
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What drove you to write a book on taxation?
“The aim of the book was to get people thinking and talking about tax, and questioning why we have the systems we have.
There’s never been a civilisation without taxation. Think about how much we study history yet we barely study taxation. It should be a subject at school.
You design a society the way you tax it: a society’s destiny is determined by the way it is taxed – how prosperous or poor, how free or suppressed its people are.
At the moment, the UK is one of the worst offenders in terms of length and unnecessary complexity, but not from the point of view of how much we’re taxed. Government spending – largely funded by taxes and debt (a tax on the future) - is over 40% of GDP. America is a bit below. France is not far off 60%. No wonder the French are rioting.
There are common problems throughout the developed world. Politicians put the focus on policy, not the system itself: the fact the UK doesn’t even have a minister for HMRC speaks volumes.
When writing and researching the book, what did you find that surprised you?
Tax is the story that never stops giving. Once you start looking at the world through the prism of taxation it’s hard to stop. For example, the only reason we were given surnames was for the purposes of levying tax: to distinguish Tom the baker from Tom John’s son from Tom who lives by the hill.
And why do men predominantly have short hair? To fund the Napoleonic Wars, Pitt the Younger introduced hundreds of petty taxes, including one on wig powder. However, there were many who objected to the wars, and, in order to signal their objection, they stopped wearing wigs and wore their hair short, so Pitt couldn’t get their money for his war. Over time the wig tax died a death as a fashion accessory. Pitt’s wig tax changed fashion.
Even the title of the book, the expression ‘daylight robbery’ is thought to come from the window tax, a property levy based on the number of windows in a house. This changed architecture for centuries and defined how cities and buildings looked.
In the book, I use the lines ‘tax is control’ and ‘tax is power’. If a king or a government loses control of the tax base, they lose both.
So is there a solution?
I’m a low tax guy. We’re taxed too much. The last Chancellor who committed to fewer and simpler taxes was Nigel Lawson, who removed a tax with every budget. The code trebled under Gordon Brown, then doubled again under George Osborne, even though he promised to simplify it.
Governments should commit to simpler, lower, flatter taxes, in my opinion. I’m a big believer in a location usage tax – Henry George’s land-value tax - but only to replace other taxes, not in addition to them.
The Mansion tax was a bastardised version of this and it caused Labour no end of problems. Politicians struggle to introduce new taxes in times of peace. You normally need some kind of emergency. Our current rates of income tax are as a result of the two world wars. War breaks out and the rates rise, but when the war dies and the emergency goes away the tax rates never go back to where they were before the emergency.
And finally, what do you see as the future of taxation?
There is a big – but gradual - shift coming, I think. Income tax accounts for around 50% of government revenue in the developed world. The relationship between employer and employee has been easy to tax. But the nature of work is changing. More people are becoming freelancers. There are more gig workers and so on.
Income tax is easy because governments can go straight to employers and deduct at the source. But with more freelancers joining the market (EY says that by 2030, 50% of the US workforce will be freelance) this will become increasingly difficult. Freelancers tend to pay less tax than people in full-time employment doing the same job.
The other big problem is that tax systems were designed around the physical economy. Governments have struggled to tax the globalised, intangible economy – and that’s where all the growth is. As workers themselves get more globalised and digital, particularly as more and more of them are not being paid in their national currency, governments will struggle to regulate and tax workers in the way they were previously able to do. Five or ten years from now it’s going to be a big problem for them."