Taxes, Oh Deer!

Taxes, Oh Deer!

23 Mar 2021 4 minutes

Swiss citizens must file their annual tax returns by the end of March each year. A light-hearted look at the past, around the world and into the woods just might make this compulsory annual task a bit more bearable.

Nobel laureate physicist Albert Einstein knew that “the hardest thing in the world to understand is income taxes.” Grasping the theory of relativity is child’s play in comparison. There’s hardly a Swiss citizen who wouldn’t agree with him on that at the moment because it’s March again, and the deadline for filing tax returns at the end of the month is inexorably approaching.

But all the moaning is evidently exaggerated. Switzerland’s tax system ranks 20th out of 100 for simplicity according to the Tax Complexity Index developed by Paderborn University and Ludwig-Maximilians University Munich, in Germany. The quality of support from tax authorities in Switzerland is practically unparalleled, and the process of filling out and submitting tax forms and paying taxes owed is rated as very good. The English Channel island of Jersey ranks number 1, by the way, and Brazil ranks number 100.

Estonians Have It Easy with Income Taxes

It’s not surprising that the British island tops the rankings because it is one of the very few countries in the world that has a flat tax under which every taxpayer pays the same rate. At the extreme, a flat tax enables no-fuss withholding taxation at source without any tax declaration forms. Taxpayers on the island of Jersey pay a uniform tax rate of just 20% on their income regardless of their socioeconomic status, but are not dispensed from filling out tax forms. They and the Swiss can gaze with envy at another flat tax country, Estonia, which occupies fourth place in the rankings.

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47 Tax Laws in 17 Countries and the EU

The adjacent article shows that filling out a tax return isn’t uniformly toilsome in every country and that tax collectors occasionally get creative. The humorous anecdotes have a mission-critical background: Tax laws vary considerably from one country to the next and change constantly. This confronts financial institutions with big challenges in monitoring tax compliance, appraising the tax implications of financial returns, applying withholding taxes, and preparing reporting in connection with financial instruments, issuers, and individuals.

SIX ensures that financial institutions comply with all country-specific and cross-border tax regulations at all times by continually broadening its tax information offerings to include additional countries and by constantly updating them to include new rules. SIX currently offers specialized data services for 47 tax laws in 17 countries and in the EU, including section 871(m) of the US Internal Revenue Code, the US Foreign Account Tax Compliance Act (FATCA), and EU financial transaction taxes.

 

Employers in Estonia deduct taxes monthly from their employees’ gross salaries. “Around 95% of the population just has to check over the digital tax form and hit ‘send,’ ” explains Robert Krimmer, a professor of e-governance at the Tallinn University of Technology, in the magazine brand eins, adding that “there are no tax consultants in Estonia because the system is so simple.” What could be easier?

Taxes have been around since early antiquity. Called “tribute,” “toll,” or “tithe” back then, they served more or less the same purpose as they do today: to finance a government’s budget. For centuries, however, taxes were pretty arbitrary. The Roman emperor Vespasian, for example, taxed the use of public toilets. His dictum “pecunia non olet,” meaning money doesn’t stink, echoes to this day. 

The hardest thing in the world to understand is income taxes.

Albert Einstein

It wasn’t until the 18th century that the Scottish philosopher Adam Smith put forth the concept that taxes should be equitable. In 1799, England was the first country to introduce an income tax as we know it today, and then immediately abolished it. In Switzerland, Basel-Stadt was the first canton to switch from a wealth tax to an income tax as its main source of revenue in 1840. The bulk of the other cantons followed suit during World War I to fill empty public coffers. From antiquity to today, wars were often the reason for introducing new taxes. But there’s also a prominent inverse example of taxes leading to war. When England imposed a new tax on tea for its colonies in 1773, colonists in America waged a war of independence, giving birth to the USA as a byproduct.

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Taxes – a Serious Matter, Isn’t It?

Taxes are a serious matter indeed. Even Al Capone, arguably the greatest gangster kingpin of all time, found that out firsthand. He ended up in prison in 1931 not for murder or bribery, but for tax evasion. So, beware when filling out your tax return.

Which brings us back where we started. Perhaps filling out your tax return would be less aggravating if you were aware of the absurdities that people in other countries have to grapple with. In several US states, a slain deer can be deducted from taxes if it is donated to the poor. In Sweden, names of babies must be approved by the Swedish Tax Agency – Lego and Google are okay, Allah and Ikea aren’t. And Japan’s notorious “metabo” law, also known as the “fat tax,” requires 40- to 75-yearolds to get their waists measured every year. Women and men with waistlines exceeding 90 and 85 centimeters, respectively, may face a tax surcharge. Knowing that might make doing your tax return seem a little more fun.

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