|In the 17th century there were various ways in
which the king could raise money to finance expenditure. Revenue
was collected from a variety of sources - including, for example,
the Crown estates, such as those that belonged to the Duchy
of Lancaster. In addition, income was received from customs
duties and feudal
Any increase in the latter was liable to incur political opposition.
Ship money, 1638
||During the 16th century these traditional
sources of income had proved to be inadequate to support the
cost of government, and Elizabeth I had resorted to raising
money with the consent of Parliament. Although both Elizabeth
and the early Stuart kings had intended parliamentary taxation
as an 'extraordinary' means of raising money, they came to depend
on it - and by the 17th century it had become a very important
source of income for the Crown. However, the assessments for
such subsidies did not reflect the true incomes of the landowning
classes, and the Crown had to rely on loans from the City of
London to make up shortfalls in the royal finances.
How to raise revenue?
Both James I and Charles I became engaged in searches for
solutions to their growing financial problems, which were
exacerbated by involvement in war. Attempts to raise money
by extending customs duties or by seeking funds from Parliament
met with opposition and became caught up in the political
turmoil of both reigns. They were also seen as a threat to
the independence of local communities. In 1626 Charles resorted
to taxation without the consent of Parliament in the form
of a forced loan, which although successful was unpopular.
The Parliament that met in 1628 granted him a subsidy, but
only after he had assented to the Petition
Glasgow malt tax riots, 1725
Tea smuggling, c.1737
|During the years from 1629 to 1640,
when Charles ruled without Parliament, obscure sources of revenue
- such as forest
- were exploited, as well as customs duties. These measures
met with a mixed reception, although the decision in 1635 to
extend the tax known as 'ship money' (which had previously been
confined to the maritime counties) to inland counties was perceived
as unfair, and returns eventually declined. Eventually, lack
of money compelled Charles to call a Parliament in 1640. The
political disputes of the first half of the 17th century, which
ended in civil war and the execution of the king, demonstrated
the difficulties surrounding the absence of adequate mechanisms
for obtaining consent to taxation.
A financial revolution
In the wake of the Glorious
of 1689 came a financial revolution. The income of the Crown
was restricted and the monarch now relied on Parliament for
sufficient funds, even in peacetime. The fact that Britain
was almost continuously at war between 1689 and 1714 therefore
meant that Parliament met frequently. The level of taxation
increased, and taxation became more regular. It was also more
widely spread and - because of this and because it was backed
by parliamentary approval - it became more acceptable, with
little serious opposition. Taxes fell into three main groups:
customs duties, 'excises' (taxes on beer, salt, malt and other
products), and taxes on property or status (including taxes
on land, windows and bachelors). In addition to taxation,
money was raised by large-scale borrowing.
Request for window tax exemption, 1765
Tax on distilleries, 1784
Fair or unfair?
Despite the general acceptance of the new tax regime, there
were aspects that caused discontent. This was particularly
true of excises, the collection of which involved officials
working under the direction of central government. An attempt
by Sir Robert Walpole in 1733 to compensate for reductions
in land tax by imposing excise duties, instead of customs
duties on tobacco and wine, caused an outcry and he was forced
to back down.
|As Britain became engaged
in expensive conflicts, so the number of taxes (especially indirect
taxes) multiplied and the middle classes, as well as the poorer
members of society, suffered. In these circumstances it became
more difficult to impose new taxes in times of peace, despite
an army of revenue officers. At the end of the 18th century,
when Britain was at war with France, William Pitt's government
introduced a tax on income (in 1799) in order to finance the
high military costs. Pitt believed that income tax would be
regarded as a fairer form of taxation - an idea that has continued
to the present day.
Income Tax Act, 1799
Stamp Act, 1765
representation is tyranny'
The American colonies presented a more intractable problem.
The Stamp Act passed in 1765 - which levied duties on services
such as legal transactions and appointments to public office
- met with a storm of protest that challenged Britain's right
to tax the colonies while denying them parliamentary representation.
Although the Act was repealed in 1766, it was one of the grievances
that contributed to the American War of Independence, which
began in 1775.
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