History of The English Fiscal System - Direct Taxation

Direct Taxation

Almost at the beginning of the age of parliamentary taxation, one of the older sources of revenue ceased, popular opinion having forced King Edward I to issue in 1290 the Edict of Expulsion which required the Jews to leave the kingdom. It is probable however that owing to the exactions practised on them, Jewish usurers had become progressively less profitable to the Exchequer. Certainly, the kingdom's general resources had so increased that their contribution became less important.

The first effects of parliamentary influence on the fiscal system were the abandonment of tallages on towns and the decline of scutage. Taxes on movables were assessed more systematically so that instead of using varying charges, ranging from one-fourth to one-fortieth, on different classes of goods, the tax was imposed at fixed rates of one-tenth on towns and one-fifteenth on counties. Commissioners were appointed for each county to ensure stricter assessment and were supplied with special instructions as to taxable and exempt goods. This tax remained in force from 1290 to 1334, albeit the proportions imposed varied over time (e.g. an eighth and a fifth were granted to the king by parliament in 1297, and a tenth and a sixth in 1322).

A more general influence was the growing national economy which led to greater activity on the part of the king as administrator which, in turn, increased the state's need for revenue. Although constitutionally the king was expected to live off his revenues, the force of events made this increasingly impracticable. Therefore, from being uncertain and indirect, taxation, especially that on movables, became certain and direct, absorbing older forms over time. Under medieval conditions, the collection of a general property tax presented serious difficulties in that, unsurprisingly, each local and borough authority tried to keep assessments as low as possible.

England in the 14th century was not ripe for a system that was found hard to make effective even in more advanced societies. Hence, from 1334 onward, the following method of apportionment was employed, i.e. a tenth and fifteenth was taken as affording a definite sum measured by the yield on the ancient valuation. As this gave between £38,000 and £39,000 in the aggregate, the tenth and fifteenth became for the future practically a fiscal expression for a sum of about £39,000, the total to be divided or apportioned between the several counties, cities and boroughs according to their former payments. This settlement, which remained in force for centuries and affected all later direct taxes, had the great advantages of certainty and adaptability. The inhabitants of any particular town knew their total liability and could distribute it amongst themselves in the manner most convenient to themselves. From the royal standpoint, the arrangement was also satisfactory, for the tenth and fifteenth could be multiplied (e.g. in 1352 three tenths and fifteenths were voted for three years), and supplied a stable revenue for the service of the kingdom. Moreover, the power of regulating the policy of the crown by the bestowal or refusal of grants was naturally agreeable to parliament. Thus, all sections of the nation united in support of the system established in 1334, just before the opening of the Hundred Years' War, in connection with which it was particularly serviceable.