Over the eighteenth century the fiscal system became more dependent on excise duties, tariffs and stamp duties.
The most important direct tax was the land tax. In theory this was a national rate of 1s, 2s, 3s or 4s in the £ on the income not only of land but also of personal property and office; in principle it should rise in line with rents, profits, and salaries. But in reality the tax was confined to land and its yield did not reflect the actual income from rents.
The land tax was supplemented by a range of ‘assessed taxes’: these aimed to tap the income of the rich by taxing signs of conspicuous wealth and display such as windows, male servants, horses and carriages.
However land and assessed taxes declined from 40.1% in 1696-1700 to 17.4% in 1791-5. The result was an increasing reliance in indirect taxes in the form of excise duties on a limited range of goods; and duties on exports and imports. The share of customs duties was also falling, in part because of the inefficiency of the customs service. Many officials held their posts through political patronage and they were jobs for life. There was also a desire to protect strategic goods and encourage colonial trade.
The greatest increase in revenue over the 18th century came from excise duties – these were collected by ‘efficient bureaucrats’ rather than by lay commissioners; they were paid salaries rather than fees, were promoted on merit and given retirement pensions, and controlled and monitored by supervisors based at Somerset House. The share of central government revenue from the excise increased from 28.9% in 1696-1700 to 51.55 in 1791-5.
As a general rule government worked though the justices of the peace. Collection of the land tax, assessed taxes and later the income tax was delegated to commissioners drawn from the ranks of the local taxpayers, which contributed to a high level of consent. Local structures of power were reinforced rather than subverted. The government’s revenue was closely monitored by the Treasury Commissioners who produced accounts for parliamentary scrutiny. Burke argued that, compared with France, this created a ‘patriotic alliance’. However the system of bargaining had its weaknesses that could be exploited by powerful vested interests.
The outbreak of war placed strains on the fiscal constitution and exposed the inadequacy of existing taxes. From 1792-8 the national debt increased by about 80%.
At the end of 1797 Pitt introduced the so-called ‘Triple Assessment’, a form of graduated income tax based on the payment of the assessed taxes of the previous year. Individuals with the largest taxable establishments of carriages and male servants paid five times the previous amount, while smaller establishments paid less than a quarter more. For the first time this required the state to know more of an individual’s financial circumstances, and was a major change in the principles of taxation. The Triple Assessment was met with mockery and outrage. ‘The budget was passed in January 1798 but it raised the question of how much longer Pitt could go on increasing the assessed taxes.
In the spring the Speaker Henry Addington’s suggestion of a voluntary contribution caught on. Pitt gave £2,000 (which he did not have!), the king £20,000. The provincial newspapers reported the names of subscribers, which included the very poor. The success of the Voluntary Contribution helped convince Pitt that the nation was ready for more sacrifices.
In that spring Pitt was preoccupied with forming a new coalition against France. A new wave of arrests spelled the end of the London Corresponding Society. In April Habeas Corpus was again suspended. At the end of the month he took the huge gamble of sending a fleet through the Straits of Gibraltar in order to disrupt the French Mediterranean fleet. Though this decision was to be vindicated, it left Ireland dangerously exposed. On 19 May the Irish revolutionary, Lord Edward Fitzgerald, was arrested. At the end of May Pitt was engaged in a heated parliamentary exchange with the radical Whig, George Tierney. The following day he accepted his challenge to a duel, which took place on Putney Heath on 27 May 1798. This led to a critical Commons motion from Wilberforce, which was only withdrawn under pressure.
At the end of May the United Irishmen rose in revolt. (See later post.)