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Taxation

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 incidents

such as wardships

. Any increase in the latter was liable to incur political opposition.

Ship money, 1638
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Hearth Tax return, 1666 - opens new window

Hearth Tax return, 1666
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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 of Right.

Glasgow malt tax riots, 1725 - opens new window

Glasgow malt tax riots, 1725
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Tea smuggling, c.1737 - opens new window

Tea smuggling, c.1737
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During the years from 1629 to 1640, when Charles ruled without Parliament, obscure sources of revenue - such as forest fines

- 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 Revolution 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 - opens new window

Request for window tax exemption, 1765
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Tax on distilleries, 1784 - opens new window

Tax on distilleries, 1784
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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
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Stamp Act, 1765
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'Taxation without 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.