The poll tax (1377)
The poll tax, first used extensively in England in 1377 at 4d per head, was designed to provide a more stable revenue for the crown than taxes on property, land and commodities. The tax was highly unpopular, for everyone paid the same, regardless of their means. The situation was made still worse by exemptions granted to children on the basis that girls were virgins – leading John Legge, serjeant at law, to carry out public examinations.
In 1380 the levy was three times higher than previously, and in East Anglia, where attempts to enforce collection were rigorous, opposition to the tax was fierce. What came to be known as the Peasants’ Revolt began in Essex and culminated in Wat Tyler’s march on London in 1381. The rebels proclaimed their loyalty to the king, but claimed that they suffered unjust taxation and oppression by royal officials and local law officers. The rebellion was crushed, and Tyler was executed.
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But it was not entirely a lost cause. Serjeant Legge was also executed; the arrears of tax were written off; and the speaker of the House of Commons, Sir Richard Waldegrave, who had himself been a tax collector in Essex, denounced “dishonest, greedy and violent officials”.
The excise crisis (1733/34)
Britain was at war with France for most of the 18th century. The conflict was costly, and increased levels of taxation could potentially lead to political unrest.
From the Glorious Revolution of 1688 the crown needed permission from parliament to levy taxes, and annual parliaments have been held every year since. Traditionally, taxes were levied on imports and exports into the country, which led to running battles with smugglers. Landowners paid a tax on their property, but since they controlled parliament the land tax was not increased in line with their incomes. As a result, the government became more dependent on excise duties on domestically produced goods such as beer, spirits and glass – with each tax being voted on by parliament.
The politics of this situation were fraught, and exploded in 1733/4. Taxes were used to pay interest on the national debt incurred to fight wars. Payment was in the hands of the Bank of England, and country gentry and small merchants feared that the Bank was a bastion of the moneyed interest sucking the blood from real Englishmen. Jonathan Swift complained in 1710 that “Power which… used to follow Land, is now gone over to Money”. They also feared that Sir Robert Walpole, prime minister, was seeking independence from parliament by introducing a general excise, a tax on all goods in the country.
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Commercial interests facing higher taxation united with gentry who feared the emergence of great financiers and landed oligarchs, and dreaded the loss of the freedoms of parliament. In reality, Walpole had not proposed a general excise but the outcry meant that limits were set on taxation, and the privileges of parliament were reinforced. The excise crisis of 1733/4 was a central event in defining the British state.
Window tax (1696)
In addition to taxes on land, customs duties, and the excise, there was a fourth type of extraction: the ‘assessed taxes’. These taxes fell on conspicuous consumption whose whole point was to be visible, such as riding horses (rather than farm horses); male servants (rather than female domestics); powder for wigs worn by gentlemen; and windows, which were taxed from 1696. Rich members of society were willing to show their disregard for the tax by flaunting their windows; others evaded the tax by bricking them up. ‘Blind’ windows are still a feature of English houses, long after the tax was abolished in 1851.
The income tax (1799)
The land tax extracted a fixed sum of money, and did not rise to reflect the increased value of land in the 18th century. As a result, more of the burden of providing the government with sufficient revenue fell on excise tax. Yet this could not make up the shortfall: the immense cost of the wars with revolutionary France meant that another way was needed to extract money from landowners prospering as a result of the demand for food and raw materials from their estates.
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In 1798 the prime minister, William Pitt, tried to secure more money through the ‘triple assessment’, that is increasing the assessed taxes as a form of tax on income, and asking under-taxed landowners to make a voluntary contribution. Neither produced sufficient revenue for the war, and in 1799 Pitt turned to that most terrible of taxes: the income tax.
The income tax was a wartime measure. It expired when peace was signed in 1802, only to return when hostilities resumed in 1803. The radical politician Francis Burdett was clear: “The income tax has created an inquisitorial power of the most partial offensive and cruel nature… The repeal of this tax is not a sufficient remedy for its infamy; its principle must be stigmatised and branded.”
The force of Burdett’s complaint was reduced because collection and assessment of the taxes was performed by commissioners drawn from the local community who were part of the tax-paying public, rather than state bureaucrats; they already collected the land and assessed taxes from their neighbours.
But in 1814, the Board of Inland Revenue took a disastrous step: it suspended the commissioners in the City of London on the grounds that they were colluding in tax evasion. Here was an attack on the liberty of citizens. Such was the hostility that “like the office of hangman, none but the refuse of society could be induced to take the appointment” of tax collector. Income tax could not continue after the war and expired in 1816. All the administrative records were burned so that it would never again be introduced.
The loss of income tax revenue and failure to increase the land tax meant that rich landowners escaped their fair contribution while consumers and industrialists were more heavily taxed to pay the costs of the national debt. The result was radical outrage. The income tax offered the rich an insurance policy against attacks on their position, and so returned in 1842 on a temporary basis. It has survived ever since.
The revenue from the income tax allowed a reduction in customs and excise duties on tea, sugar and tobacco, enabling the poor to share in the benefits of commerce and industry. So, rather than an engine of oppression, the income tax came to be accepted as a sign that British society was fair and inclusive.
Taxes on knowledge (1815)
After the Napoleonic wars, the British state was attacked by radicals as a ‘tax-eater’, taking money from the poor to give it to the rich. In order to stifle popular protests, in 1815 the government increased tax on newspapers to 4d, taking them out of reach of the poor and stopping (so it was hoped) the spread of radical criticism. If anything, it had the opposite effect.
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In 1830, the radical Henry Hetherington started his Penny Papers for the People, which was succeeded by the Poor Man’s Guardian in 1831. Hetherington mounted an open attack on the tax, proudly proclaiming that his paper was seeking to overturn the ‘tax on knowledge’. The tax was counterproductive, hitting respectable as well as ‘seditious’ publications. Worried conservatives therefore argued for a reduction, as did middle-class reformers and free traders, who believed that a free trade in print was a much better way of securing social harmony. The Association for the Promotion of the Repeal of Taxes on Knowledge mounted a campaign which finally succeeded in abolishing the tax in 1855.
The corn laws (1815)
The profits of landowners were protected by the imposition of a duty on imported corn in 1815.
During the 18th century, the tax had worked reasonably well in securing stable supply and reasonable prices for both consumers and producers: when the price of grain fell, the government imposed a higher duty on imports to maintain domestic prices, and offered farmers an export bounty; when the price of grain rose, it reduced duty to encourage imports.
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But the tax of 1815 seemed selfish and extortionate, designed to maintain high wartime profits and prices for landowners who were not paying sufficient taxes. Critics argued that food security should now be guaranteed not by protecting domestic producers but by encouraging free trade in grain from overseas. In 1838, the Anti-Corn Law League under the leadership of Richard Cobden and John Bright mounted a campaign for repeal, the greatest mass movement of the time.
When he announced the repeal of the corn laws in 1846, Robert Peel followed the sentiments he expressed when introducing the income tax in 1842: to elevate the social conditions of the people, and to “frame its legislation upon the principle of equity and justice” which would guarantee social harmony and political stability.
The match tax (1871)
Robert Lowe, the chancellor of the exchequer, proposed a new duty on matches in 1871. Each box was to bear a stamp, with the image of a flame and the words Ex luce lucellum – or ‘from light, a little gain’. The joke, remarked one Liberal politician, might “divert a college common room”, but the thought of Oxford dons smiling over a tax on the poor was bad politics.
A leading economist rallied to the defence of the tax, arguing that the poor should contribute to the state in proportion to their means. If they did not, surely taxes would fall on capital which would flee to foreign countries and so lead to unemployment. Such arguments were no match for the bad politics of Latin puns, and the tax was abandoned in a matter of weeks. Bryant and May, the great match manufacturer, erected a celebratory drinking fountain on Bow Road to mark the defeat of the tax.
The hut tax (1898)
Victorian Britain was an imperial power: it could reduce taxation at home and increase it for those who did not vote at Westminster. Consequently, much of the burden of paying off the national debt passed to the inhabitants of India or Africa. The inequity of these taxes – falling, as they did, on a necessity of life for the poor – could be exploited by nationalists such as Gandhi, who led marches against the salt tax. They also led to violence in Africa.
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Huts were visible and easily counted. What’s more, the need to pay a tax in money would force natives to create a commercial, capitalist economy. Many Africans, however, had no desire to give up their traditional way of life or to pay a tax to the imperial power – especially as they paid a higher proportion of their income in taxes than European settlers and companies, who paid little or nothing. As a result, the hut tax was often collected through brutality and force.
Not surprisingly, the hut tax and its wider implications for social and economic structures led to periodic resistance, such as the ‘hut tax war’ in Sierra Leone in 1898 and the rising of the Zulus in 1907. At the Colonial Office, Churchill criticised the “disgusting butchery of natives” that made Natal “the hooligan of the British empire”.
Selective Employment Tax (1964)
Taxes are not only a means of raising revenue for war and welfare, public order and administration. They can also be used to shape the economy and society. The hut tax was an extreme form of social engineering. The selective employment tax was another such attempt.
By the 1960s, there was widespread concern that Britain’s rate of economic growth was falling behind that of its neighbours in Europe, as well as Japan. In response, the new Labour government of 1964 hatched a national plan to raise the rate of growth to five per cent per annum.
According to government economic advisor Nicholas Kaldor, an obvious reason for Britain’s low rate of economic growth was that the country had already gone through a major structural change with the movement of people from the land to industry. Productivity could be raised in industry; by contrast, services could not raise their productivity. Furthermore, goods were taxed through the purchase tax, which had been introduced during the war, whereas services were not covered, and these formed an increasing share of total consumption.
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Kaldor’s solution was a tax on employment in the service sector, introduced in 1966. It would check the movement of labour into services and make industry more competitive. The most that Labour politicians could say for it was that it was not the Value Added Tax, another way of taxing spending on services which was widely seen as a burden on the poor. The Conservatives derided the Selective Employment Tax as a sign that Labour was wedded to a “ludicrously old-fashioned view of the structure of our economy”. They abolished the tax in 1972 and announced the adoption of VAT, marking a move from direct taxes on income that had existed since 1842.
Poll tax, mark II (1990)
In the second half of the 1980s, the government of Mrs Thatcher devised a flat-rate tax to cover the costs of local government and to replace the existing property tax or rates paid on each house. It was very soon named by its opponents as the poll tax.
The rationale of the poll tax conjured up a particular nightmare: each adult member of a large family living in a modest house had a vote but had a rebate on the rates, and received large benefits, with no incentive to vote for cheap government. A poor widow living next door paid her rates, had only one vote, and supported her neighbours in their wastrel ways. Should not the poor contribute to the costs of the state? The answer was to oblige each adult to pay a flat-rate poll tax which would make them act in a prudent and responsible manner, and vote for cheaper government. When the tax was imposed in 1990, the myth of the poor widow was soon replaced by another equally emotional claim: that a wealthy duke living in his stately home paid the same poll tax as a poor resident in the estate village.
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The tax was widely seen as unjust, and many refused to pay. The All-Britain Anti-Poll Tax Federation march in London on 31 March 1990 became a full-scale riot and Mrs Thatcher complained that “law-abiding, decent people” were in league with the “mob”. Many in her own party feared that she was responsible for this unholy alliance as a result of her rigidity. She fell in 1990 – and the new government of John Major soon came up with a graduated council tax. The moral of the tale is that a moment’s thought about political consequences saves a lot of trouble; and that taxes should, as Robert Peel realised, be designed to create social cohesion rather than conflict.
Martin Daunton is professor of economic history at Cambridge University.