What was the hat tax ?
The prosperous Georgian gentlemen would have owned a number of hats, one for each occasion, some more expensive than others. He would always like to be seen properly dressed in his hat which would hopefully be bigger and better than that of his friends. In those days, size did matter !
It would therefore have been seen as a sensible move for the newly elected Pitt the Younger to impose a tax on hats. It would hurt the rich a lot more than the poor. As with tax policies today, those better off would pay more because of the sheer number of hats they owned and, because those less well off would probably only have one hat, it meant the poor would pay less. Clever - a tax on the rich !
Between 1784 and 1811 every hat retailer had to buy a license to sell hats. The cost of the retail license was two pounds in London and five shillings elsewhere.
In addition, there was a tax imposed on each hat which needed to have a revenue stamp stuck inside on its lining showing that tax had been paid. The amount of the duty depended on the cost of the hat.
- Cost under four shillings - duty of threepence
- Cost between four and seven shillings - duty of sixpence
- Cost between seven and twelve shillings - duty of a shilling
- Cost over twelve shillings - duty of two shillings.
I am not sure why, but this hat tax was only levied on men's hats, not women's. Was that fair ?
Heavy fines were given to anyone, milliner or hat wearer, who failed to pay the hat tax. However, anyone forging the hat tax revenue stamps would be subject to the death penalty.
Tax avoidance ?
I remember the technical arguments and the time spent discussing whether something was a 'cake' and zero-rated for VAT purposes or whether it was a 'biscuit' and subject to VAT at 20%. Similarly, the hat makers tried to get round the law by stopping calling their creations 'hats' and heated discussions must have ensued. In the end nobody won and the loose definition of a 'hat' in the legislation lead to the hat tax being imposed on all headgear by 1804.
Forgery in those days was a capital offence. In 1798 John Collins, aged just 23, was convicted of forging a hat stamp and he was executed on 30th January 1799 along with another forger and two highway robbers. The local newspaper reported that "the unfortunate malefactors were turned off immediately having come upon the scaffold. They behaved with a degree of decency becoming their unhappy fate, and were launched into eternity at eight o'clock. The assemblage of spectators on this awful occasion was almost the thinnest ever known". Must be bad enough to be executed for tax evasion but even worse if nobody turns up to see you off !
The tax was repealed in 1811.