History of The English Fiscal System - Indirect Taxation

Indirect Taxation

Parallel with the evolution of direct taxation, but decidedly lagging behind, is the progress of indirect taxation. As already mentioned, the right of levying dues on goods entering or leaving English ports belonged from very early times to the king. Whether this power was, in its origin, due to the protection afforded to traders and thus a kind of insurance, or the result of the royal prerogative of pre-emption is immaterial for finance. What is established is that the prisage of wine or levy of one cask in ten, and the taking of one-tenth or one-fifteenth of other commodities was in force. Attempts to impose additional dues were forbidden by Article 41 of Magna Carta which recognized the ancient and just customs.

One of the earliest effects of parliamentary influence is manifested in the establishment of duties on wool, woolfells and leather by the first parliament of Edward I. After efforts by the king to gather increased duties, the Confirmation of the Charter (1297) forbade any increases on the amounts fixed in 1275, which were henceforth known as the ancient customs.

Another attempt was made to obtain a higher scale of duties by arrangement with merchants. Foreign traders consented to the royal proposals, which comprised duties on wine, wool, hides and wax, plus a general tax of 1¼% on all imports and exports. Thus, in addition to the old custom of half a mark (6s. 8d.) per sack of wool and each three hundred woolfells, as well as one mark (13s. 4d.) per last or load of leather, foreign merchants paid an extra duty (or surtax) of 50% and also 2s. per tun of wine, the so-called butlerage.

The privileges laid down in the Carta Mercatoria (1303) were probably granted conditionally on the acceptance of these enhanced dues. English merchants, however, successfully resisted them so that the old prisage of wine remained unchanged, at least for them. Despite parliamentary opposition on the ground that they amounted to an infringement of the Great Charter, the new customs remained in force. After being suspended in 1311, they were revived in 1322, confirmed by royal authority in 1328, and finally sanctioned by parliament in the Statute of the Staple (1353). They therefore formed part of the permanent crown revenues from the ports and, together with other, older, customs, became the basis for further development.

Just as the old direct taxes were supplemented by, and then absorbed into, the general taxation on movables, so customs, in the strict sense, were followed by subsidies or parliamentary grants. One great source of English wealth in the 14th century was the export of a peculiarly fine wool. Thus, the political circumstances of Edward III's time suggested its manipulation for purposes of both policy and revenue. Sometimes in order to influence the towns of Flanders, the export of wool was absolutely prohibited; at others, varying export duties were imposed not only on wool, but also skins and leather. In the reign's early years, these were settled in agreement with merchant classes.

These subsidies were first imposed in 1340, being henceforward granted despite frequent complaints. Thus, in 1348, Parliament objected to an export duty of £2 per sack on wool on the ground that it was in fact a tax on landowners who, as a consequence, received lower prices for their wool. Bargains between the king and merchants were forbidden and were therefore brought under parliamentary control by statutes passed in 1362 and 1371. In 1347, besides special duties on wool, imposts on wine and general goods were increased by agreement at a charge of 2s. per tun on the former and 2½% on the latter. Indeed, between 1371 and 1376, these were established as grants under the names Tunnage and Poundage, older dues being left intact.

Read more about this topic:  History Of The English Fiscal System

Famous quotes containing the words indirect and/or taxation:

    An indirect quotation we can usually expect to rate only as better or worse, more or less faithful, and we cannot even hope for a strict standard of more and less; what is involved is evaluation, relative to special purposes, of an essentially dramatic act.
    Willard Van Orman Quine (b. 1908)

    Whether talking about addiction, taxation [on cigarettes] or education [about smoking], there is always at the center of the conversation an essential conundrum: How come we’re selling this deadly stuff anyway?
    Anna Quindlen (b. 1952)