Income tax– “temporarily” with us for 95 years

July 3, 2012 by Sharon Adams

This month marks the 95th anniversary of the introduction of income tax in Canada—a “temporary” measure to help fund the First World War.

The government imposed a number of financial measures to deal with the growing economic burden of the war. Luxury taxes and taxes on goods and services –train and bus tickets, telegrams, patent medicines, tea and coffee–even business profits.

By 1916 the cost of the war had risen to $600 million (close to $11 billion in today’s dollars), and there was nothing for it but to introduce personal income taxes, too.

In introducing the tax, Finance Minister Sir Thomas White said he had placed no time limit on the measure, not knowing how long the war might last. But a year or two after the war “the measure should be reviewed…with a view of judging whether it is suitable to the conditions which then prevail.”

In war and in peace, income tax has been judged suitable ever since.

Since practically the dawn of recorded history, leaders have instituted such taxes to help pay for war or defence.  Ancient  Greece and Rome had war taxes.  Britain has a long war tax history. Tithes were collected to support a crusade to the Holy Land in 1188. Income tax was introduced in Britain in 1799 to pay for weapons and equipment for the Napoleonic Wars.

Britain’s folk history about dealing with burdensome taxation is also long, but none perhaps so familiar as the myth of Lady Godiva, an 11th Century chaste and demure noblewoman who supposedly pleaded with her husband Leofric for tax relief for her people in Coventry. That would happen, he replied, when she rode naked at noon hour through the streets of the town.  We might say the rest is history–if only historians agreed that it actually happened.

Canadians may not be familiar with the reason behind the barebacked ride, though most of us are familiar with the chocolates bearing the name of the community-spirited crusader–upon which we pay federal and provincial taxes, a portion of which goes to the defence department budget to pay our troops and keep the armed forces in equipment.

 

 

 

 

 

 

 

 

 

 

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