The evolution of taxation in the United Kingdom of Great Britain and Northern Ireland as a history of relations between the state and the taxpayer.

The United Kingdom of Great Britain and Northern Ireland is the oldest carrier of the Anglo-Saxon system of law today. The legal and tax systems of the state are unique, which, of course, is the result of a long and not always simple development. At the same time, it should be said that the British tax system is built quite successfully, as evidenced, for example, by the recognition of the country as one of the most attractive for doing business ^[1]. Here, quite logically, the question arises as to how the state managed to build the elements of the tax system in the most favorable way both for itself and for taxpayers. In this regard, the author has set a goal to consider the history of the formation of the tax system of the state through the prism of the relationship between the government and the taxpayer, since, in our opinion, this approach allows us to more accurately reflect the specific features acquired by the studied taxation system in the process of development. Thus, the object of this study is the most significant stages of the development of the tax system in the United Kingdom of Great Britain and Northern Ireland. It should be noted that most of the studied milestones of historical development are highlighted by the British as key ones on the website of the Government of the United Kingdom ^[2].

The time frame of the study is limited by the appearance of the Magna Carta and the present. The study of the problems in the work begins precisely from this stage, since this document, according to the author, was the first to consolidate the key principles of taxation on the territory of the entire state, and also appeared as a compromise, as a result of the confrontation of the interests of the state and taxpayers. 

 The subject of this study is the history of the search for a balance between the needs of the population and the government, as well as the reasons why these historical dates are considered the main ones in the history of the development of British taxation. 

In the course of this research, the author uses general scientific methods, such as analysis, induction and special scientific methods, such as historical-legal, historical-doctrinal, narrative methods. 

To write this work, the works of British researchers, English-language articles on this topic, as well as materials from scientific websites were used. 

The novelty of this study is to study the history of British taxation from the point of view of the relationship between the state and the taxpayer. Also, the author makes an attempt to highlight the history of the formation of the British tax system in the context of the issues under consideration. 

Study. 

The development of tax law in the UK is a story of not always simple relations between the people and the state, as well as the search for compromises in tax policy.  

The tax law of Great Britain begins its history back in the days of the feudal system ^[3]. As in many other states, there was a land tax, and later taxes related to the trade of certain goods. However, an important starting point is the appearance of the Magna Carta, because, in our opinion, it is here that the first principles of the tax system that are uniform for the state are laid, although, as the researchers note, Magna Carta it is rarely perceived by researchers as a tool for regulating the tax system ^[4]. Chapter 12 of the Charter of Liberties fixed the impossibility of imposing duties on subjects except by the general council of the kingdom and in all cases the duties had to be moderate: “Neither shield money nor allowance (auxilium) should be levied in our kingdom except by the general council of our kingdom (nisi per commune consilium regni nostri), if it is not for our redemption from captivity and not for the knighthood of our first-born son and not for the first marriage of our first-born daughter; and for this purpose only a moderate allowance should be given; in the same way it should be done with regard to allowances from the city of London” ^[5]. Chapter 15 of the Charter reads:  “From now on, we will not allow anyone to take benefits from their free people, except for ransoming him from captivity and for knighting his first-born son and for marrying his first-born daughter by the first marriage; and for this, only a moderate allowance should be taken” ^[5], which testifies to the legislative consolidation of the tax sovereignty of the state. It should be noted that this norm was born as a result of protests in connection with the increase in the traditional tax on English knights for unwillingness to serve. Thus, we see that the primary formation of the tax system and the direct legislative consolidation of taxation norms is, as it were, the product of a dialogue, albeit not entirely peaceful, between the state and taxpayers.  

In 1380, Poll taxes were first introduced, which provoked a peasant uprising in Kent. The population of Britain wants to influence the tax system and is protesting against excessive, in their opinion, excessive payments. It should be noted that this tax was levied equally from the entire population, which was the cause of discontent. As we will see in the future, the state takes into account the causes of popular unrest and adjusts the tax system to the existing social conditions. 

In the history of England, there were also uprisings caused by taxes imposed in individual counties. So, in 1497, the introduction of a tax for the inhabitants of Cornwall, provoked an uprising, which, however, was not successful. As can be seen from the above, taxpayers' discontent was caused mainly by direct taxes, nevertheless, the majority of tax revenues (from half to two thirds) in this period are indirect taxes. According to researchers ^[6], such a ratio of tax revenues was a kind of manifestation of “democracy” and characterized the British tax system.  

 It should be noted that during the XV-XVI centuries there were no significant popular unrest caused by the introduction of new taxes. At the same time, it cannot be said that this period in the history of the state was calm, which was explained by other reasons, including issues of succession to the throne and politics. 

 In the XVII century, riots are called “The Law on Ship Money” (TheShip Money Act 1640), which later led to an uprising against the king and his execution, and in 1641 Parliament declared the tax illegal ^[7]. Note that it was necessary for the state, because it was aimed at the development of the fleet. Moreover, it was with the help of funds collected through this tax that 40 ships were built, and among them the famous “Lord of the Seas”. 

At about the same time, in 1641, a poll tax was introduced for the second time, but for nobles. An income tax of 5% was introduced for the common population in the same year, however, the people resisted paying the tax so much that in 1698 it had to be abolished as “unsuitable for England". Let's pay attention to the wording of the reason for the abolition of the tax, which clearly reflects that the state, firstly, takes into account the socio-cultural characteristics of its people when forming the tax system, and, secondly, is ready to meet the wishes of taxpayers and take them into account by setting or canceling certain payments. Obviously, the authorities are aware of the benefits of such a policy for themselves: the population that “agrees” with taxes does not resist paying them, and as a result, tax revenues are collected stably and in due volume. 

 In the XVII century, among other things, the first excise taxes on beer and tobacco were introduced (in 1643), as well as a land tax (1693), stamp duty (1694), a hearth tax (1662), and, in 1698, a tax on windows was introduced, which existed for almost two years centuries, until 1851.  Most of the taxes introduced during this period did not cause significant unrest in the state. Nevertheless, we note a curious feature: the hearth tax in the state caused much more outrage among the people than the window tax and was abolished much earlier. The discontent was due to the fact that the inspectors, who were engaged in counting the number of foci in the house, could freely enter the dwelling. Thus, during this period, the population continues to protect their rights. At the same time, not only the right not to pay excessive taxes is defended, but also the right to inviolability of the home. In general, this stage is characterized by the active formation of the tax system in the state.  

Studying the history of British taxation, special attention should certainly be paid to the teachings of Adam Smith, which primarily influenced the UK tax system. The scientist sought to systematize the rules by which the Government levies taxes.  In his work  “Research on the nature and causes of the wealth of nations” (“In The Wealth of Nations"), in Book V, chapter 2 (Book V, chapter 2), the researcher writes about the main rules, canons of taxation. Here are the main principles of tax policy deduced by the scientist. 

Firstly, each subject of the state should support the government to the extent possible, while the state protects taxpayers in proportion to their contribution. Secondly, each tax paid by the subjects of taxation must be legally defined. The time and method of payment, the amount of funds to be paid, must be clear both for the taxpayer and for any other person. Thirdly, each tax should be collected at the time and in the order that should be most convenient for the payer. Fourth, each tax should be so thought out and designed to take out and keep as little as possible from people's pockets, in addition to what it brings to the treasury of the state ^[8]. These four famous principles were later called the "Magna Carta of the payer" and the "declaration of the rights of the taxpayer"

Thus, Adam Smith clearly outlined the following: 

Firstly, each tax should be levied depending on the ability to pay it by the subject of taxation (ability-to-pay principle). At the same time, at first it was believed that the equality of taxpayers should be measured by the amount of spending, and not by the amount of money earned.  Today, scientists believe that the equality of taxpayers should be determined according to the volume of consumption and solvency throughout life, although some theorists believe that the size of wealth and accumulated funds can also be a good indicator for determining the “tax capacity” and equality of taxpayers ^[8]. 

Secondly, Adam Smith's provisions show that the payments charged must be equivalent to the benefits received by the subjects of taxation in return (thebenefit principle).   

Thirdly, Adam Smith speaks about the equality of taxpayers in the same or similar position (as far as it corresponds to the purposes of the tax) (horizontal equity) ^[9]. It is obvious that this doctrine was reflected primarily in the structure of taxation of the United Kingdom, and in our opinion, largely determined the fate of the state's tax system. Let's pay attention to how these principles were embodied in it in the future. 

 At the end of the XVIII - beginning of the XIX century, significant changes in the tax policy of states are taking place, since it is during this period that the history of income tax begins to develop rapidly. Due to the fact that the wars with Napoleon required spending, the state needed to replenish the treasury. For this reason, in 1799, an income tax was introduced, paid from income from almost all types of activities both inside and outside the country. Taxation was progressive, and the maximum rate was 10%. It should be noted that this was influenced by the teachings of Adam Smith, who was a supporter of a progressive taxation system, because it follows the principles he developed. In 1803, a shedular system was introduced within the income tax, which includes 5 shedules and became the first such system in the world. It is worth noting that this division formed the basis of today's taxation system in the UK ^[10].  At the same time, taxation at the source was introduced, which made it possible to double the number of taxpayers without meeting resistance from society ^[11]. Nevertheless, the tax was abolished in 1816 due to the discontent of the population after the war, despite the government's desire to replenish the treasury. Thus, the wishes of the people, as well as the preservation of social stability, are more important for the state than the need to replenish the funds spent.  

In 1842, income tax was introduced again, while the state is already acting more carefully, taking into account the wishes of the population, and taxes only income over 150 pounds sterling (i.e., a tax-free minimum was introduced). Such innovations made it possible to abolish customs duties on more than 700 goods, which, consequently, contributed to the growth of the economy. Thus, at this stage there is a clear use of the regulatory function of taxation, as well as the carefully considered use of tax mechanisms to stabilize the economic situation in the country.  It is also worth noting that the state, on the one hand, takes into account the wishes of taxpayers and meets them halfway, and on the other hand, it is quite consistent in its policy and does not abandon its own needs, following the requirements of the population. 

At first it was assumed that the introduction of income tax would be temporary, but government spending, which also increased during the Crimean War of 1853-1856, did not allow it to be canceled. In the same years, Parliament begins to pay even more attention to ensuring that the expenses of taxpayers' funds are not excessive, which also reflects the teachings of Adam Smith. For this purpose, the Committee of Public Finance under the House of Commons was founded in 1861. So in the UK, public confidence in the state is also growing ^[12], which is primarily facilitated by the policy of the state itself, since it is aware of the importance of supporting the population.  

In the context of this study, it is impossible to ignore the history of taxation in the XX century, since it is at this time that the relationship between the taxpayer and the state reaches the peak of development. So, in wartime, the Parliament, being confident in the support of the population, over the strengthening of which it had already thoroughly worked before, was able to raise the income tax rate without hindrance in order to increase the amount of funds collected. The rate increased from 6% in 1914 to 30% in 1918. Moreover, the number of income tax taxpayers more than doubled from 1914 to 1920 (from 1.13 million to 3 million people) and continued to grow further, exceeding 12 million people in 1938 ^[13]. Thus, the amount of tax revenues from direct taxes in the early 20s was about 60%. Realizing the importance of income tax, the Parliament in 1918 began work on consolidating the legislation relating to income tax, although it turned out to be quite difficult. 

Along with the introduction of pensions in the XX century, there is a need for a sharp increase in the fleet, in connection with which, along with the payment of pensions, the tax burden increases. Further reforms were carried out up to 1914 and concerned national insurance, unemployment assistance and required an even greater increase in taxes. In this regard, taxes on purchases were introduced, the income tax rate increased, and a purchase tax was introduced (in 1940), replaced by VAT in 1973 due to accession to the EU.

In 1944, the Kingdom introduced the PAYE-pay as you earn system, according to which taxes are levied depending on the amount of money earned. Of course, the system embodies the ability-to-pay principle developed by Adam Smith. 

Today's taxation system continues to develop in the spirit of cooperation and mutual understanding between the state and the taxpayer, which is easy to trace in almost every existing tax. 

Conclusions. 

Having conducted this study, the following conclusions can be drawn. Firstly, throughout its history of development, taxation in the UK has been a product of interaction between the population and the state, which can be identified as a characteristic feature of the British tax system. Secondly, taxpayers as a rule took an active position and expressed their dissatisfaction with payments, quite often seeking their cancellation. Thirdly, the authorities in the state, on the one hand, always listened to the wishes of the people, and on the other hand, they were still looking for ways to achieve their goals in various ways, without meeting the resistance of taxpayers. 

Also, the following periods of the formation of the British tax system can be distinguished. As the first stage, we can designate the period before the creation of the Magna Carta, characterized by the existence of disparate taxes and the absence of general principles of taxation. The second stage is the period between the creation of the Magna Carta and the middle of the XVII century, since this is the time of the formation of the basic principles of the British tax system, as well as the time of uprisings and the beginning of the formation of relations between the state and the population in the plane of taxation. The third stage is the time from the middle of the XVII century to the middle of the XVIII century, characterized by the active development of the tax system and the introduction of a large number of new taxes, as well as more confident and accurate attempts by the authorities to change the tax system. As the fourth stage, we can single out the period of the creation of the teachings of Adam Smith and the introduction of the principles developed by him into the tax system of the state (from the middle of the XVIII to the end of the XIX century). The fifth stage in the development of the tax system of the state is the XX-XXI century, when the state has worked out both ways of introducing tax mechanisms and ways of interacting with taxpayers so that the change of the tax system goes quite smoothly and the population as a whole is ready to pay taxes.  

Thus, today we see a well-built, well-thought-out tax system in the Kingdom and, not least, an important role in it is played by the relationship between the state and its subjects, nurtured with extraordinary care on the part of the authorities. Such a tax system is the result of a rich and not always simple history of taxation in the UK, however, as it has already become clear, all the difficulties were worth the effort, because the Kingdom turns out to be an attractive place for taxpayers from all over the world, and the state's economy continues to flourish.