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VATupdate Newsletter Week 2 2022

In 1698, Russian Tsar Peter the Great introduced a ‘Beard Tax’. He did this after his visited Western-Europe, where he liked their fashion sense of not wearing long beards, as was exceedingly popular in Russia at that time. Peter degreed that everyone with a beard had to pay tax. In turn, everyone who paid the tax, was given a ‘beard token.’ If you were stopped by the police without the token, they would immediately shave your beard off.

You can read more about the beard tax and the ‘fashion police’ HERE

Taxes have been existing for a long time. The beard tax is just an example of a special type of tax, instead of a ‘straightforward’ tax on income or turnover. The beard tax was in fact also income related: rich people with beards were taxed higher than poor people. And the extremely poor people went around bare faced… Which was in fact the way Peter liked it!

VAT is the same for everyone, whether you are rich or poor. At least, that was the initial intention of this type of taxation: the more you consume, the more you pay. Or: The more you can spend, the more you pay. But for the basics, everyone pays the same, which means that the rich people have more left to buy more…

Therefore, there is the possibility to apply reduced rates for ‘essential’ products and services. This reduces the costs of these items, which means that everyone has more left to spend on ‘luxurious’ products and services. We have mentioned this before, but the latter is nowadays used increasingly to steer consumption as well. Exactly like Peter the Great did.

The beard tax was part of a larger project: Peter the Great’s aesthetic reinvention of Russian culture. Not just the beards, but also fashion was influenced by Peter’s intention to make Russia look more like ‘modern Europe.’

Besides the beards, Peter ordered his subjects to replace their usual long Russian overcoats with French or Hungarian jackets. He even had mannequins put outside the Moscow city gates to illustrate the new fashions for all to see. Tailors who continued to sell Russian styles were fined, and anyone walking the streets in an old-fashioned robe ran the risk of having it cut short by the Tsar’s inspectors.

Steering consumption is not new. Governments nowadays aim to improve health and safe the environment. But in a way, that is the same as all of us having to wear the same fashion and not wearing beards. Unless you can afford to do so…

See you again next week!

If you have any comments, questions or ideas that you want to share with us, please send us an email at [email protected] or leave a comment under the posts of this newsletter on LinkedIn.


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