TAXATION IN BRITAIN SINCE 1660 Also by Roy Douglas

LAW FOR TECHNOLOGISTS

HISTORY OF THE LIBERAL PARTY, 1895–1970

LAND, PEOPLE AND POLITICS: A History of the Land Question in the United Kingdom, 1878–1952

IN THE YEAR OF MUNICH

THE ADVENT OF WAR, 1939–40

NEW ALLIANCES 1940–1

FROM WAR TO COLD WAR, 1942–48

WORLD CRISIS AND BRITISH DECLINE 1926–56

GREAT NATIONS STILL ENCHAINED: The Cartoonists’ Vision of Empire, 1848–1914

THE GREAT WAR 1914–1918: The Cartoonists’ Vision

BETWEEN THE WARS 1919–1939: The Cartoonists’ Vision

THE WORLD WAR, 1939–45: The Cartoonists’ Vision

SURREY: The Rise of a Modern University Taxation in Britain since 1660

Roy Douglas Emeritus Reader University of Surrey First published in Great Britain 1999 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library.

ISBN 978-1-349-39912-3 ISBN 978-0-230-37526-0 (eBook) DOI 10.1057/9780230375260

First published in the United States of America 1999 by ST. MARTIN’S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 ISBN 978-0-312-22217-8 Library of Congress Cataloging-in-Publication Data Douglas, Roy. Taxation in Britain since 1600 / Roy Douglas. p. cm. Includes bibliographical references and index. ISBN 978-0-312-22217-8 (cloth) 1. Taxation—Great Britain—History. I. Title. HJ2603.D68 1999 336.2'00941—dc21 99–18160 CIP © Roy Douglas 1999 Softcover reprint of the hardcover 1st edition 1999 978-0-333-67364-5 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10987654321 08 07 06 05 04 03 02 01 00 99 Contents

List of Figures vii Acknowledgements viii Chronology ix

1 Restoration 1 2 Revolution and After 12 3 Eighteenth-Century Taxation 21 4 The French Wars and After 34 5 Mid-Century 46 6 Tithes and Local Taxation 60 7 Constructive Taxation 72 8 Turn of the Century 84 9 Radicalism 92 10 War and After 104 11 Between the Wars 113 12 The Second World War 124 13 Postwar Taxation 132 14 The Age of Confrontation 139 15 Overview 146

Notes 157 Bibliography 164 Index 169

v This page intentionally left blank List of Figures

Figure 1 BM E63/No. 4676. Playing card No. 14 from the set ‘Reign of James II’, probably ca. 1690–1700. Reproduced by permission of the British Museum 2 Figure 2 BM 1733–1936. Reproduced by permission of the British Museum 22 Figure 3 ‘The Strategem. Alias The French Bug-a-Bo or John Bull Turn’d Scrub’. Reproduced by permission of the British Library 36 Figure 4 BM 12,752. iii. 1816. ‘The Death of the Property Tax’. Reproduced by permission of the British Museum 38 Figure 5 ‘Indirect Taxation’. First published in Punch, London, vol. 2 (1842), p. 201 48 Figure 6 ‘The Paper Cap’. First published in Punch, London (2 June 1860) 50 Figure 7 ‘Bold Robin Hood’. First published in Punch, London (5 May 1894) 73 Figure 8 ‘The Artful Hunter’. First published in the Pall Mall Gazette, London (15 June 1909) 94

vii Acknowledgements

The author wishes to express grateful thanks to his wife Jean and to David Mills for their helpful comments on the manuscript. He also wishes to thank the British Museum and the British Library for permission to reproduce the figures indicated in the list on p. vii.

viii Chronology

1649 Execution of Charles I. 1658 Death of Oliver Cromwell. 1660 Charles II returns to England. Parliament agrees to pay off army, and to provide £1.2 million a year for the King’s needs in future. 1662 Introduction of Hearth Tax. 1671 Abolition of tax-farming for customs. 1672 Stop of the Exchequer. 1683 Abolition of tax-farming for excise. 1684 Abolition of tax-farming for Hearth Tax. 1685 Death of Charles II; accession of James II/VII. 1688 Expulsion of James II/VII. 1689 William III/II and Mary II recognised as King and Queen. War with France. End of Hearth Tax. Revival of ‘Monthly Assessments’, which gradually developed into ‘Land Tax’. 1694 Establishment of Bank of England. First lottery loan. 1696 Window Tax introduced. 1697 End of ‘Nine Years War’ with France. National Debt around £16.7 million. 1698 Poll Tax passes into disuse. 1702 Death of William III/II; accession of Anne. Commencement of new war with France (War of Spanish Succession). 1707 Act of Union adopted by English and Scottish Parliaments. Gradual unification of most taxes. 1714 Death of Anne; accession of George I. 1721 Sir Robert Walpole (later dubbed ‘Prime Minister’) becomes First Lord of Treasury and Chancellor of Exchequer. 1733 ‘General Excise’ crisis. 1736 Gin Tax designed to reduce consumption of spirits. 1739 ‘War of Jenkins’s Ear’, which later becomes ‘War of Austrian Succession’. 1742 Resignation of Walpole. 1748 End of War of Austrian Succession. 1756–63 ‘Seven Years War’ with France. 1765 Stamp Act applied to American colonies. 1773 ‘Boston Tea Party’. 1776 American Declaration of Independence. Publication of Adam Smith’s Wealth of Nations. 1783 Formal conclusion of peace with United States. William Pitt the Younger becomes First Lord of Treasury and Chancellor of Exchequer. 1787 Beginning of French Revolution. 1793 Execution of Louis XVI. War with France.

ix x Chronology

1795 Introduction of ‘Speenhamland system’ of pauper relief in Berkshire, soon adopted in many other counties. 1798 Great increase in ‘Assessed Taxes’. Provision for redemption of taxpayers’ liability for ‘Land Tax’. 1799 Income Tax introduced. 1801 Union between Great Britain and Ireland. Pitt resigns; succeeded by Addington. 1802 ‘Peace of Amiens’. Income Tax abolished. 1803 War with France resumed. Income Tax restored. 1804 Pitt becomes ‘Prime Minister’ again. 1806 Death of Pitt. 1815 Battle of Waterloo. End of French Wars. 1816 Income Tax abolished. 1825 Abolition of remaining salt duties. 1832 ‘Great Reform Act’ results in substantial increase in electorate and abolition of the worst ‘rotten boroughs’. 1833 Abolition of slavery throughout British Empire. Incorporation of Scottish Burghs with elective authorities. Similar legislation later applied to England and Wales (1835) and Ireland (1840). 1834 Poor Law Amendment Act for England and Wales establishes ‘workhouse test’ for recipients of poor relief. 1842 Budget of Sir Robert Peel results in abolition or reduction of many customs duties, and reintroduction of Income Tax. 1845 Beginning of Irish Famine. 1846 Repeal of Corn Laws. 1853 Gladstone’s first Budget. Many further reductions in indirect taxes, including abolition of soap duties. Abolition of Irish Poor Law debts occasioned by the Famine, but introduction of Income Tax in Ireland. 1854 ‘Crimean War’ begins. 1860 Cobden’s treaty with France. Another Gladstone budget results in abolition of protective duties. 1861 Abolition of paper duties. 1867 Further extension of franchise. 1872 Secret ballot. 1879 Exceptionally wet summer precipitates long-term agricultural crisis. Publication of Henry George’s Progress and Poverty stimulates radi- cal thinking about distribution of wealth and relation to land question. 1884–5 ‘Household franchise’. 1888 Establishment of County Councils. 1891 Elementary education becomes free as well as universal. 1894 Sir William Harcourt’s budget abolishes distinction between realty and personalty for inheritance purposes, and introduces graduated inheritance taxation. Establishment of District and Parish Councils. 1899–1902 Boer War. 1903 Commencement of Joseph Chamberlain’s ‘Tariff Reform’ campaign. 1906 (January/February) General Election gives new Liberal Government large majority, vindicating Free Trade policy. Parliamentary Labour Party established. Chronology xi

1908 Introduction of Old Age Pensions. 1909 First Lloyd George budget. Proposals include land valuation and taxation; Income Tax graduation; introduction of Super Tax (later known as Surtax). Budget rejected by House of Lords. 1910 After January General Election, 1909 budget proposals accepted. 1911 Parliament Act removes power of House of Lords to reject Money Bills, and reduces power of House of Lords to reject other bills. National Insurance Act passed. 1914 Outbreak of First World War followed by massive and repeated increases in taxation. 1915 First Coalition Government (Asquith). Introduction of McKenna Duties. 1916 Second Coalition Government (Lloyd George). 1918 Armistice. New General Election confirms Lloyd George Coalition in office. 1919 Austen Chamberlain budget adapts McKenna Duties to policy of Imperial Preference. 1920 Abolition of Land Taxes and land valuation. 1922 All taxation powers of UK Parliament over most of Ireland renounced. Fall of Coalition. 1929 Great Depression begins in US. 1931 National Government formed. Large increases in taxation and reductions in unemployment benefit. 1932 General policy of protective tariffs adopted. 1933 Failure of Disarmament Conference, followed by gradual intro- duction of rearmament and increased taxation. 1937 Defence Loans Act authorises rearmament financing through increases in National Debt. 1939 Outbreak of Second World War followed by repeated further tax- ation increases. 1940 National Government replaced by Coalition Government (Churchill). Introduction of Purchase Tax. 1942 Beveridge Report. 1944 Income Tax PAYE comes into effect. 1945 End of Second World War. Labour Government replaces Coalition government. 1946 National Insurance and National Health Acts. 1951 Rearmament consequential on Korean War leads to taxation increases and introduction of National Health charges. 1965–6. Capital Gains Tax, Selective Employment Tax (SET) and Corporation Tax introduction. 1971–3 UK joins EEC (1973). SET reduced, later abolished. Purchase Tax phased out, replaced by VAT. Surtax abolished. 1975 Unemployment begins to rise substantially. Petroleum Revenue Tax (PRT) introduced; yield becomes substantial in 1978–9. 1979 Margaret Thatcher Prime Minister. Rapid further increase in unemployment. Sir Geoffrey Howe’s Budget results in decrease in Income Tax (continued in subsequent years), but increase of VAT to 15 per cent and increase in PRT. Rapid increase in PRT yield. xii Chronology

1989 Community Charge (‘Poll Tax’) applied to local authorities in Scotland. 1990 Community Charge and UBR applied to England and Wales. Great shortfall in anticipated revenue. Fall of Thatcher. 1991–2. Replacement of Community Charge by Council Tax. VAT increased. 1997 Labour Government (Tony Blair).