An Analysis of the Smithfield Riots of 1647 and The Napoleonic War of 1798 - Essay Example

? Historical Events that Shaped Modern Tax Laws in the United Kingdom: An Analysis of the Smithfield Riots of 1647 & The Napoleonic War of 1798 Your Name Your Number Introduction Taxation is a major source of revenue for the UK government and has been part of the government's revenue generation since the days of Roman rule1. In these two millenia, a lot of transformation and reformation have occurred in the UK taxation system and this laid the foundations for the income tax, corporation tax, value added tax, excise duties and other forms of taxation that exist today in Britain and to a large extent, America and the British Commonwealth. The first recorded taxation systems were imposed by the Roman occupation2. However, when the Roman empire declined, Saxon kings imposed the Danegeld tax which were levied on property and land3. With time, when the English Monarchy was established after the Norman's conquest, custom duties on imported goods were imposed. In 1377, the poll tax was levied on individuals in a progressive manner where poor people paid less whilst richer people paid more4 In the reign of King Charles I in the 1600s, he argued for high taxes because he claimed it was the divine right of the king5. With time, the Parliament got upset with his requirement because he was demanding a progressive taxation system whereby the rich would pay more whilst the poor would pay less6. Since most of the parliamentarians and nobles were going to be affected by this new arrangement, the disagreement went on and on until King Charles I was charged with treason by parliament and executed in 16477. Eventually, this led to a period where the monarchy was suspended and replaced by Parliament and a Prime Minister. This paper examines two critical incidents in England at the end of the medieval period and the renaissance which shaped the taxation system of Britain as we have it today. It examines the Smithfield riots and the Napoleonic wars and their influence on Britain's taxation system. The Smithfield riots are connected with the rule of Oliver Cromwell whilst the taxation regime instituted by the Napoleonic war was under the mandate of William Pitt the Younger. The background to the Smithfield Riots Oliver Cromwell took over power as the dominant leader when the monarchy was abolished briefly after the death of King Charles I8. This was as a result of the power vacuum that came with the disagreements between the King and Parliament. One of the main issues that led to the disagreement had to do with taxation. The King wanted everyone in the country to pay taxation proportionate to his income. This was one of the first cases of a progressive taxation system. However, the nobles and the leaders who had most of the wealth felt they would be affected significantly. So this and other incidents led to the execution of the King. Oliver Cromwell was a military commander who gained full charge over England's wars in 16429. Once Cromwell began the wars against the Scots and other nations mainly on the British Isles, it was necessary for the war to be given the necessary funding to ensure the victory of the English troops10. Eventually, Cromwell had to appeal to Parliament to help him to raise funds to support the war effort of the nation. In 1643, parliament imposed excise taxes on essential commodities like grain, meat and other basic necessities which ensured that the necessary funds could be raised11. This was essentially higher than the taxes proposed by King Charles I which led to his execution. The significant difference was that it was regressive in nation. In other words, the nobles and leaders of the country were not affected much because the taxes were mainly on basic goods and they needed just a little. However, the properties and land of the nobles were not significantly affected. On the other hand, the commoner bore more taxes because such persons relied heavily on grains and meant for their everyday livelihood. In other words, a significant amount of their revenue was spent on basic necessities like food and other products which caused them to suffer disproportionately in relation to the richer people. This led to so much disapproval of the new taxation system. The tax was however justified because it was necessary to help defend the nation from foreign aggressors. So the best way to protect the security of the nation was to fight a foreign war that would provide them with the necessary support and protection from foreign forces. However, the fact that the taxes were on essential commodities and commoners were suffering severely from its effect made the masses show conspicuous signs of dislike for the tax. This eventually led to the Smithfield riots12. The Smithfield Riots On 15th February 1647, about five years after the tax had been in operation, a purchaser of livestock refused to pay his excise duty13. The excise official attempted to stop him but a crowd came to the aid of the man who refused to pay. A confrontation ensued and the crowd spoke harshly against the tax. Eventually the crowd was dispersed and the man refused to pay the tax. Later on, a mob of butchers and other angry crowds moved to the scene the event occurred14. The butchers were obviously angered by the situation and they destroyed properties of the excise officials and tore their books in complete defiance of the tax. Four months later, the excise duties were taken off meat and home produced salt15. This was in reaction to the public's action and defiance of the taxation system16. This clearly shows that the UK government was sensitive to the kind of distress that the taxation system was causing to the masses and then decided to incorporate some elements of humanism in ensuring that the tax served its true purpose without destabilising the lives of other citizens of the nation. Implications of the Smithfield Riots There are various implications that came with the Smithfield riots. First of all, the Smithfield Riots is rooted in the conflict between Progressive Taxation and Regressive Taxation. King Charles' proposition that all people get taxed according to their income and earning was absolutely right and necessary for the sustenance of a modern nation. However, King Charles I erred by asserting that the King has a right to collect the taxes because of a God-given privilege. This did not go so well with the nobility and parliamentarians and this led to his execution. This assertion and philosophy amongst monarchs in Europe of that generation was responsible for numerous wars and disagreements. The French revolution was based on similar circumstances where the king asserted that he had a divine right to rule the nation. This showed that no king or executive branch of any government is meant to collect taxes to enrich himself. A few years after the execution of the King, Parliament saw the practical need to institute a tax collection system. Parliament also erred by imposing a regressive tax on that affected the masses more than the nobles. In other words, the taxing of basic goods made live difficult and unbearable. The citizens demonstrated this by the Smithfield riot which showed that a regressive tax is bad for the masses and when all the masses are upset about a taxation system, they can cause unrest as it occurred in France a century later. Therefore, the Smithfield riots demonstrated the conflict between progressive and regressive taxation. It showed the practical need for taxes to be sensitive to the needs of the people in the country. This is because no state can function without a taxation system. This was demonstrated in a practical manner as opposed to the medieval thought that a king was given a divine right to collect taxes. So the events leading to the situation showed the need for taxes. Secondly, the Smithfield riots showed that although taxes are important, they need to be levied in a manner that is reasonable and allows people to have normal and comfortable lives. This showed the British people the need to form a more progressive tax regime and make allowances for the basic necessities of the masses. Today, the Smithfield event can be seen as the basis for the creation of a Personal Allowance that most people are entitled to in the United Kingdom. This means that certain earnings are not taxed and this ensures that the poorest people in the society can afford their basic needs. Also, the progressive nature of UK tax can be attributed to this incident. When people earn more, they pay more. That is why we have low, medium and high tax bands which increase according to the earnings of an individual. Additionally, the Smithfield incident creates a background for zero rated and VAT exemption charges on some essentials like food and other basic necessities. The Background to the Napoleonic Wars The outbreak of war in America caused Britain to lose a significant proportion of its taxpayers by 177617. Britain increased its poll taxes from 3 shillings to 4 shillings per person and this yielded enough money that was just about half the national debt in 177618. William Pitt the Younger was appointed Prime Minister and he had the primary task of raising money for the government. He began by acquiring loans for the payment of Britain's government costs19. William Pitt also instituted a new lottery system which increased funds and returns to the government of England in 178420. William Pitt also introduced new taxation systems to ensure that government revenue could be increased. He simplified procedures on the collection of taxes and used local tax collectors and inspectors to ensure that the tax net of the country could be widened. William Pitt introduced indirect taxes on properties, occupations and necessities in a time of tough economic conditions and requirements. This led to the creation of more revenue for the British government and eventually increased the tax net. On 17th February 1792, the annual taxes were between ?17 million and ?19 million21. This was essentially attributed to the increase in trade by England and other foreign nations as well as reduction in fraud and smuggling. The government therefore declared a ?400,000 surplus22. In line with this, Pitt stated that Britain would be able to pay of its foreign debt of ?25 million in a period of 15 years and proceed to build a sustained and prosperous economy. In the time of William Pitt, the French were also going through a serious revolution which led to the change of their government structure from a monarchy to a republic which eventually came under the control of the famous general, Napoleon Bonaparte23. Napoleon began to pursue an aggressive foreign expansion drive. This led to friction between France and England. Eventually, a full war was declared in 1798. William Pitt's Income Tax Law of 1799 The Napoleonic War meant that England had to raise much needed funds to support the nation's army. This meant that the government's treasury had to be filled as quickly as possible. The whole burden was therefore shifted to William Pitt who was the Prime Minister and exerted sufficient control over the government's treasury and taxation system. In 1799, William Pitt introduced the Triple Assessment which was a form of income tax which was based on the taxes the individual paid in the previous year24. Under this tax regime, duties were imposed based on the chattels and properties a person owned and what the individual paid in the previous year. Persons who earned below ?60 in the previous year were exempt. However, due to some failures in the Triple Assessment system, it was abolished. The Income Tax Act came to force in 179925. The new income Tax Act meant that anyone earning ?200 was to pay 10% of his income to the government's treasury as tax. Persons earning less that ?60 per year were exempted form this tax requirement. Persons earning between ?60 and ?200 paid a rate of taxation proportionate to their income but less than the 10%. Initially, William Pitt stated that this taxation arrangement was strictly for the British War effort. It was to be abolished right after the war ended. However, the law remained in force and it eventually became the basics of today's income tax system in Britain. Therefore, the Napoleonic War event formed the foundation of the income tax law as it exists today. Although it was initially meant to support in Britain's defence budget, it became the basis for the establishment of a legal framework for the collection of money to furnish the treasury of the state to ensure that the nation could build and sustain structures for development and growth. Influence of the Income Tax Law on Taxation Today The independence of the United States from Britain was a great 'schism'. It showed unprecedented financial challenges and burdens that had never been seen in Britain's history. Thus, the ingenuity of William Pitt the Younger laid the foundation for possible changes in the law to enhance the collection of more taxes to furnish the state's treasury. This laid the foundation for the modification of tax laws (the Financial Act) as we now have it once every two years in response to pertinent changes in the economy. Secondly, the Napoleonic war laid the foundation for the creation of an income tax system. The proposals of William Pitt in the events around the time of the war gave way for the establishment of tax regimes over property, chattels and other income and investments which exist to this day. To-date, people's income, savings and investments are taxed to support the government's treasury. This is similar to the times of William Pitt because chattels were the closest to investments and savings. Also, property taxes and rates are still levied by local councils and authorities to provide income to the treasury. Additionally, the Napoleonic wars provided the impetus for the creation of a progressive tax regime. In other words, when the Income Tax Act of 1799 is compared with the taxes collected at the time of Oliver Cromwell, it is evident that this system was much more progressive. This is because people earning above ?60 were the only once taxed. The elements of regressive tax regimes were effectively eliminated. Also, the tax bundles for persons earning between ?60 and ?200 laid the foundations for the creation of tax percentages for different kinds of people at different points in time. This means that the impetus for the collection of taxes was set at this time. However, it can be argued that this tax regime was not progressive enough because there was little difference between ?200 and ?60. However, at that time, I am sure the tax was significant and was the best to be declared. Conclusion The Smithfield incident was connected to the elements of the medieval debates on whether taxes were collected for the king or for the development of the state. The incident showed clearly that taxes are to be collected for the development of the nation but should be sensitive to the poor in the society. This laid the impetus for the establishment of progressive tax regimes rather than the regressive regimes which were more popular in the 1600s. The Napoleonic war was an event that shaped Britain's tax history. It came up at the time where the British had lost a considerable number of its taxpayers to the United States. It showed that Britain's government and parliament could change the tax laws to respond to current conditions. It also showed that taxes are to be progressive rather than regressive in nature. Moreover, it indicated that taxes could be collected for investments, savings and other forms of earnings. Bibliography David Sharp (2003) Oliver Cromwell London: Taylor Press. Donald Rutherford (2002) Routledge Dictionary of Economics London: Taylor & Routledge Emmanuel Adetula (2011) The Naked Truth Calibre Books. Harrison Spaulding (1927) The Income Tax in Great Britain and the United States London: PS King & Sons Ltd James Malcom (2011) Taxation of Small Business: Fourth Edition London: Spiramus Press Ltd John Paul Mitchell (2008) No More Taxes Lulu Publishing Mark Beloff (1938) Public Order & Popular Disturbances London Marlyn Bennett (2006) Oliver Cromwell London: Routledge Michael Braddick (1991) “Popular Politics & Public Policy at Smithfield in 1647 and its Aftermath” The Historical Journal 34 3 p597 – 626 Michael Turner (2003) Pitt The Younger: A Life Continuum International Publishing Peter Harris (2006) Income Tax in Common Law Jurisdictions: From Origins to 1820 Vol 1 Cambridge University Press. Phillip McCann & Francis Young (1982) Samuel Wilderspan & The Infant School Movement London: Taylor Francis Steven Bank (2011) Anglo-American Corporate Taxation. Cambridge University Press. William Kennedy (1913) English Taxation 1640 – 1799 London Read More