Excise and other taxes in Britain
According to history, in 1604, James I took measures to include the whole of Britain in a Central duty collection system. System known as “farm” whereby local merchants obtained the right to collect the tax on a lease basis was changed.
Under the earliest taxing schemes an income tax was imposed on the wealthy, office holders, and the clergy. A tax on movable property was imposed on merchants. The poor paid little or no taxes.
Charles I was ultimately charged with treason and beheaded. However, his problems with Parliament came about because of a disagreement in 1629 about the rights of taxation afforded the King and the rights of taxation afforded the Parliament.
The King's Writ stated that individuals should be taxed according to status and means. Hence the idea of a progressive tax on those with the ability to pay was developed very early.
Excise duties on home produced articles were first imposed in 1643 to provide money for Cromwell's Parliamentary Army and then continued by King Charles II for ‘royal purposes’.
Other prominent taxes imposed during this period were taxes on land and various excise taxes. To pay for the army commanded by Oliver Cromwell, Parliament, in 1643, imposed excise taxes on essential commodities (grain, meat, etc.). The taxes imposed by Parliament extracted even more funds than taxes imposed by Charles I, especially from the poor. The excise tax was very regressive, increasing the tax on the poor so much that the Smithfield riots occurred in 1647. The riots occurred because the new taxes lowered rural laborers ability to buy wheat to the point where a family of four would starve. In addition to the excise tax, the common lands used for hunting by the peasant class were enclosed and peasant hunting was banned.
Excise Service was introduced on 22-7-1643. Excise duty was imposed on beer. This duty is the oldest duty. Imposition of duty on beer was a temporary measure to provide funds to carry on the civil war. Later on it became permanent. It was a duty levied on home-produced goods mainly beer and ale, spirits, cider and soap. Later on, it was further extended to a wide range of imported goods such as salt, linens and leather. Duty on spirits was also introduced in 1643 and became the proverbial thorn in the battle between Excise officers and illicit producers. From its inception the Excise provoked intense popular opposition as is natural towards any new legislation especially if it is in the form of taxes.
In 1683, Charles II took the English Excise out of “farm” and placed it firmly under the control of his own Commissioners. In 1849 new Board of Inland Revenue was formed and it included the Excise Chairman. The reorganization reflected a scaling down of the Excise service due to the political and economic circumstances of the time.
This was now the era of free trade with the abolition of many restrictive Excise duties, which were thought to hinder the development of manufacturing industries.
Excise and Customs services were amalgamated in 1909. Both the wings engaged in revenue collection can trace their emergence as government departments to the reign of Charles II. Revenue department is one of the oldest government departments and has a great heritage. The department has to be flexible enough to adapt to constant change from the constantly changing rate of duty to wider political and economic changes to compete in the global market.
Disclaimer: In this note, we have attempted to summarise some of the significant aspects to be kept in mind by readers to ensure compliance of tax laws and regulations. Readers should ensure to verify specific provisions as applicable to each case before taking any business decisions. It would be pertinent to note that some changes are being made to the tax laws and rules and regulations on a continuous basis by way of notifications, clarifications etc issued by the department based on their practical experience in implementing the legislation.
It may be noted that nothing contained in this note should be regarded as our opinion. Professional advice should be sought for applicability of legal provisions based on specific facts. Though reasonable efforts have been taken to avoid errors or omissions in this note we are not responsible for any liability arising to readers directly or indirectly due to any mis-statements or error contained in this note. It must be noted that the views expressed in the note are based on our understanding of the law and regulations as published by the Government authorities and we may or may not agree or subscribe to such views.
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