Taxation in British Political and Economic Thought 1733-1816
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Taxation in British political and economic thought 1733-1816 Shane William Horwell UCL, PhD 2018 - 1 - - 2 - I, Shane William Horwell confirm that the work presented in this thesis is my own. Where information has been derived from other sources, I confirm that this has been indicated in the thesis. - 3 - - 4 - Abstract This thesis explores ideas of, and debates about, taxation by central government in Britain between the Excise Crisis of 1733 and the repeal of the income tax in 1816. It is about how the dramatic expansion of taxation in this era was understood to have happened and the effect that this was perceived to have had on politics and society. In short, it is a study of those thinkers and politicians who considered, wrote about, and debated the historical development of the modern system of taxation, its relationship with the emergence and nature of commercial society, and how a system of taxation could be made just, legitimate, and fair. Through a close examination of debates about public finance in print, in parliament, and in government, this thesis details the intellectual framework within which taxation in general, and specific taxes in particular, were discussed. This provides a new context, and a richer understanding, of the period in which taxation increased seven-fold in real terms and where taxes as a proportion of gross domestic product nearly trebled. Furthermore, this thesis contributes to the historiography of eighteenth-century ideas about the nature and emergence of commercial society, the right to private property, and social and economic inequality. The transition from feudal to commercial society, and the effect that this had on politics and socio- economic relations, was a major feature of eighteenth-century political and economic thought; however, the extent of the role played by society’s fiscal organization in this has been underappreciated. This thesis addresses this by detailing how the necessity of raising revenue through taxation impacted views of the relationship between governors and governed, the power of the state to infringe on the right to property, and socio-economic relations. - 5 - - 6 - Impact Statement In modern democratic capitalist societies taxation is an integral function of society. It is the principal means through which private individuals contribute to the public expense and fund the functions of the state, from social welfare to the administration of justice. The importance that paying taxes has to the relationship between governors and governed can be seen by the frequent use of ‘taxpayers’ to refer to members of the public; the government spends taxpayers’ money and it is accountable to taxpayers for it. In Britain, taxation is an essential part of the nation’s mythos. It was a feature of significant moments in its history, from Magna Carta, through the Peasant’s Revolt, the struggles with the Stuarts, and the loss of some of the North American colonies. As well as being an inescapable feature of modern life, taxation plays a prominent role in British history. Unlike the certainty of the use of tired aphorisms in discussion of the subject, however, taxation has not always been as certain as death. Moreover, the contemporary British system of annual budgets and permanent taxes have their origins in the seventeenth and eighteenth centuries. Although we know a great deal about certain episodes, and the political and economic context of this period, we know comparatively little about the ideas that informed the formulation of tax policy and what contemporaries thought, wrote, and debated about the origins and development of their system of taxation. The first impact of this thesis is through providing a richer understanding of the intellectual context that informed the origin and development of the modern method of regularly taxing individuals for the purposes of public expense. Moreover, it adds to research that has demonstrated that for eighteenth-century thinkers and politicians, politics - 7 - and economic activity had a complex relationship, one which they were endeavouring to interpret and explain. This was an inquiry that taxation played a crucial role in. The importance of undertaking such research, however, is not only to highlight the continuities and connections between the past and the present, but also the discontinuities. What arguments and ideas were expressed at the time that have fallen by the historical wayside as others have carried forth? In recent years there have been numerous issues for which the findings of this thesis can contribute answers; from questions of what should and should not be subject to VAT and the distinction between necessities, decencies, and luxuries; what is ‘tax justice’ and what are the proportions individuals should contribute to the public fund; how should different forms of wealth be treated by the tax system; and, how should the state deal with evasion and exercise its coercive power. In 2011, in his second Budget, then Chancellor George Osborne quoted Adam Smith’s four maxims of taxation as still being a relevant guide to public finance. To understand fully the purpose these maxims were meant to serve, we need to understand the political, economic, and intellectual context within which they were formed. - 8 - Contents Abstract p. 5 Impact statement p. 7 Contents p. 9 Acknowledgements p. 11 Abbreviations p. 13 Figures p. 15 Introduction p. 16 Chapter One: Liberty and property: the utility of taxation in commercial societies p. 53 (i) Commercial society and the Scottish Enlightenment p. 56 (ii) Justice and property in commercial societies p. 68 (iii) Liberty in commercial societies p. 93 (iv) Conclusion p. 111 Chapter Two: Proportionality and the equity of taxation p. 115 (i) The inheritance from the seventeenth-century: direct taxes on property p. 118 (ii) The inheritance from the seventeenth-century: duties on commodities p. 133 (iii) Taxing luxury expenditure p. 149 (iv) Income p. 163 (v) Conclusion p. 179 Chapter Three: Universality and the taxation of the poor p. 184 (i) The poor in eighteenth-century Britain p. 189 (ii) The universality of taxation p. 201 - 9 - (iii) The consumption of the poor p. 210 (iv) Trade, industry, and the utility of poverty p. 228 (v) Conclusion p. 247 Chapter Four: Cheating Leviathan: smuggling and the limits of the coercive power of the state p. 251 (i) Smuggling in eighteenth-century Britain p. 253 (ii) The perceptions of smuggling as a crime p. 264 (iii) Smuggling, trade, and the ‘fair trader’ p. 277 (iv) The political economy of smuggling p. 285 (v) Conclusion p. 304 Conclusion p. 308 Appendix: Table of Taxes p. 325 Bibliography p. 331 - 10 - Acknowledgements This research was supported by funding from the London Arts and Humanities Partnership (AHRC), together with additional financial support for research trips, and numerous training programmes. I thank them for their support throughout. UCL History department also provided me with some research funds for which I am grateful. I would like to sincerely thank my supervisor, Julian Hoppit, for his invaluable guidance and encouragement. I would also like to thank my second supervisor Stephen Conway for his advice and assistance in the early stages of this project. I am grateful for the feedback and questions received from all those who listened to unpolished aspects of this thesis at the London Graduate Conference in the History of Political Thought, the Economic History Society Conference, the History of Economic Thought Society Conference, and the Early Career Seminar in the History of Political Ideas at the Institute of Historical Research. I have benefitted from being part of an exceptionally collegiate cohort of PhDs at UCL without whom this process would have much less enjoyable; in particular, I would like to express my gratitude to Alex, Alys, David, Gareth, Grace, Jack, Mark, Matt, Melissa, Misha, and Shiru. I am also fortunate to have a number of non-academic friends to call upon to help remind me that there is a world outside of the walls of libraries and archives. Whether it be on much deserved holidays, trips back to the south-coast, or drinks and dinner where talk of the PhD was off the table, I am appreciative of knowing Chris, Craig, Dan, Emma, Ginge, Kat, Liam, Maw, Rick, Rosa, Sarah, Stephen, Stu, and, of course, Ludo and Dr Weasel. I - 11 - especially want to thank Lisa for making the last year more bearable than it could have been. Finally, my greatest debt is to my family, my parents and my brother, whose love and myriad forms of support have made this all possible. I am eternally grateful for all that my parents have done for me for the past four years. It is dedicated to them. - 12 - Abbreviations BL British Library, London BM British Museum, London BPP British parliamentary papers CJ Journals of the House of Commons Davenant, PCW C. Davenant, The political and commercial works, C. Whitworth, ed., (5 vols., London, 1771). EcHR Economic History Review EHR English Historical Review HJ Historical Journal HOPE History of Political Economy Hume, Essays D. Hume, Essays: moral, political, and literary, E. F. Miller, ed., (Indianapolis, 1985). Hume, History History of England from the invasion of Julius Caesar to the revolution of 1688 [1754-61] (6 vols., Indianapolis, 1983). JBS Journal of British Studies Kames, Sketches H. Home, Lord Kames, Sketches of the History of Man, J. A. Harris, ed., (3 vols., Indianapolis, 2007). Montesquieu, L’Esprit C-L. de Secondat, Baron de Montesquieu, De l’Esprit des lois, R. Derathé, ed., (Paris, 1973). NLS National Library of Scotland, Edinburgh NRS National Records of Scotland, Edinburgh NUL Nottingham University Library, Special Collections ODNB Oxford Dictionary of National Biography (oxforddnb.com) P&P Past and Present Petty, Economic writings W. Petty, The economic writings of Sir William Petty, C.