allAfrica.com: Mauritius: Income Tax Year - How the dates were set in england and mauritius (Page 1 of 1)

The Income Tax Bill in 1932 set the beginning of the financial year in July. The Mauritius Revenue Authority (MRA) still relies on it for the calculation of income tax due.

While New Year universally starts on 1 January, why does then that the income tax year vary from one country to another? As an example, it starts on 6 April in England and 1 July in Mauritius. What were the circumstances that led to the choice of these dates?

For England, this could go in the far distant times with the evolution of the calendar system since the time of Julius Caesar in 46 B.C. Until the 12th century, new year began on 25th March calculated on the basis that Jesus was conceived on that date. As the first day of the year, 25th March was the date due for the payment of rents and other service taxes to the monarchy.

Before the 12th century dawned, the first day of the year had undergone changes two times. On the advice of Sosigenes, an astrologer, Julius Caesar set the first day of January as the beginning of the new year. The world thus entered the Julian calendar and remained so until the 7th century when the powerful Christian Church ruled that 1 January would no longer be the starting date of the new year and proclaimed 25th December as the first day of the year.

But that was not the end of the story. In 1582, Pope Gregory X111 found out that there was a miscalculation of the length of the year by '.0078 of a day'. He therefore proclaimed that 5 October would become 15 October.

Many of the European countries endorsed this change and were quick to adopt what came to be known then as the Gregorian calendar. Not England which held to the traditional pre-Gregorian calendar.

But Scotland did move to the Gregorian calendar since 1600 and for almost 150 years, dates differed in England and Scotland. When in 1750, England decided to adhere to the Gregorian calendar, it made adjustments on dates with 2 September becoming 14 September and 1 January being re-adopted as the beginning of the new year.

These changes gave rise to a public outcry. The people in England used to celebrating new year day on 25 March which was also reckoned as the date of paying all dues protested that they were 'being robbed of 11 days of our lives.' In order to appease the population and by way of compensation, the government added 11 more days so that the Tax year was to take effect on 6 April and end on 5 April of the following year.

It was therefore a mixture of astrological and theological calculation right from ancient times that in a way influenced the decision of determining the tax year in England.

So when William Pitt, the Younger, who became prime minister of England at 22, introduced the income tax in 1799 to raise money to finance the war expedition against Napoleon, the income that was taxed was for the year beginning on 6 April. The levying of income tax by Pitt was contemplated as a temporary measure. It was to be scrapped when the Napoleonic war ended but Pitt kept it active all through despite the outburst of the opposition urging the people to 'rise up as one man' to overthrow it. Ever since, the income tax year in England starting on 6 April has remained a permanent adhesive.

As for Mauritius, the Gregorian calendar had nothing to do with our income tax year. It was the world-wide economic upheaval in the 1930s that compelled the British government to re-engineer the financial architecture of its colonies. In the case of Mauritius, the sugar boom of the 1920s brought in its trail a large degree of prosperity but the prosperity enjoyed was short-lived, for there followed after the boom a severe spell of economic doom.

So worrying was the situation that Lord Passfield, Secretary of state for the colonies appointed a Commission to investigate the financial conditions of the island. Headed by Sir Francis Watt in 1931, the Commission recommended a string of measures aimed at drastically re-ducing public spending on the one hand and on the other identifying new avenues of taxation to keep the treasury floating. Reduction in spending meant amongst others closure of schools, retrenchment in the civil service and a 10% cut in the salaries of all government employees 'from top to bottom.'

In reorganising the finances of the island, it was decided to introduce the income tax, a measure which had already been given some thought by the Royal Commission in 1909 but this idea did not make any headway. It resurfaced in June 1932 when the Procureur-General piloted the Income Tax Bill in the Council.

The Bill made mention of not only the collection of income tax on individuals but also of a "House tax" imposed on houses valued at Rs 500 and above, which according to the Governor, Sir Wilfrid Jackson, was to touch about 30% of the 54,097 houses surveyed in the island. The "House tax" was not easily lapped up by a disheartened population reeling under the burden of the worst economic depression ever to hit Mauritius. It was decried as "immoral" in the press and the government was not spared either for its show of being pitiless - "impitoyable."

But Sir Wilfrid Jackson, was in a hurry to fill in the government exchequer in order to steer the country towards what he said "calmer waters" and decided that the Bill should take effect on 1 July in the same year. The junior member for Port Louis, Raoul Rivet, proposed an amendment to the effect that 1 January 1933 be set as the beginning of the assessment year but Sir Wilfrid explained that he had to act swiftly since 'the convenience and exigencies of the business so demanded.'

So, it was as a quick - fix solution in June 1932 that Sir Wilfrid Jackson without wasting time decided that the tax year began on 1 July 1932 to end on 30 June of the following year. It has ever since remained so.

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