Origin
The Railway Regulation Act 1844 had established the provision of third class coaches on what became known as "Parliamentary trains". This included the right of passengers in this class to take up to 56 lb (25 kg) of luggage with them, so facilitating travel in search of work. In return, the railways were exempted from paying duty on these passengers.
The duty was collected by the Board of Trade and gradually, as services improved, the Board allowed more and more exemptions, even on trains which did not stop at all stations, as required by the Act. However, as the duty collected rose to around £500,000 in the 1860s, the Inland Revenue took an interest. A test case in 1874 against the North London Railway confirmed that trains must stop at all stations for the duty to be remitted.
This duty had always been irksome to the railway operators, who felt that it hindered their development. The railway operators formed the Passenger Duty Repeal Association in 1874, followed in 1877 by another group,the Travelling Tax Abolition Committee. Between them they lobbied for the complete abolition of the duty. As is usual in these cases, the government would not agree without some quid pro quo.
Read more about this topic: Cheap Trains Act 1883
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