On September 5th, 1698, Tsar Peter 1st of Russia imposed a tax on beards. He wanted to Westernize his country, and thought the clean-shaven look favoured by the European nations was a symbol of modernity. He exempted the clergy and the peasantry, though. Men with beards had to carry a beard token to prove they had paid the tax, or they would be shaved on the spot by officials. This was an unusual tax, not only for what it was levied on, but because it was specifically designed to change behaviour. All taxes change behaviour, even though most are levied to raise revenues. Peter’s beard tax was designed to make growing a beard a more costly activity, in order to discourage it.
The UK’s 1795 wig powder tax was imposed for revenues, taxing the aromatic perfumed powders that people put on the wigs that were then fashionable. The extra cost that added led to a steep decline in the popularity of powdered wigs, and their eventual disappearance.
The famous window tax of 1696 led people to brick up windows in the UK in order to reduce the tax band their home fell into. The 1660 fireplace tax similarly led people to brick up fireplaces. The brick tax, introduced in 1784 to help pay for the American wars, was initially charged at 2s..6d per thousand bricks, but canny builders began using larger bricks to use fewer of them. The authorities responded by slapping a larger tax on bigger bricks.
Britain’s soap tax was very unpopular, largely because it added two-thirds to the price of the coarse soap used by the poor, but a trivial mount to the refined and scented soaps of the rich. After a campaign against it, it was repealed in 1833.
France’s salt tax, known as La Gabelle, was even more unpopular, and opposition to it is reckoned to have been a contributing factor to the French Revolution. It was levied on the salt the French used for preserving food, making cheese, and raising livestock, and hit the poor hardest. The post-Revolution National Assembly abolished it in 1798, but Napoleon restored it in 1806, and it was not finally abolished until 1945, after World War II.
Taxes do tend to hang around. In 1902 Kaiser Wilhelm II introduced a champagne tax to fund an imperial navy and widen the Kiel Canal for it to sail along. The Grand Fleet is long gone, decaying relics on the ocean floor, but the champagne tax fizzes on.
Exotic UK taxes have included its 1784 hat tax and its 1789 candle tax, but Denmark probably wins the prize for the most exotic with its cow flatulence tax. Since cow-produced methane is reckoned to be a significant contributor to greenhouse gases, Danish farmers are subjected to a levy of $110 per cow. Needless to say, it created outrage among Danish farmers when it was introduced.
Taxes always change behaviour, and sometimes in unanticipated and unwanted ways. Increases in tobacco duty, for example, lead to increases in smuggled and fake brand cigarettes that are easier for underage smokers to access.
It is quite likely that the widespread adoption of taxes on income and purchases has created ways for governments to finance their activities without resorting to exotic taxes on strange items. But even here, it should be noted that taxes change behaviour, and higher top rates of income tax drive people into tax avoidance. Similarly, high rates on purchased goods lead to smuggling across borders and sometimes to cash purchases that are off the books.
The moral, if there is one, is that governments should use dynamic modelling that anticipates, where possible, the behaviour modifications that tax changes might lead to. It could make governments more cautious about levying new taxes or raising existing ones.