Thomas Tooke

Tobacco: Importance of Tobacco taxes for the colonies around the American revolution period.

In Tobacco on June 16, 2012 at 2:35 am

The Tobacco was not only important for England in the early days of the American colonies, but also for the colonies taxes as well.

As Jacobstein wrote in 1907.

“The direct and indirect effect of the tobacco industry upon other social institutions must be passed by with a brief notice. Politically, the large plantation is responsible for a representative rather than a democratic government in the southern colonies; for it was inconvenient for settlers widely scattered, as a result of the large plantation system, to come together as was the case in the town meeting of the New England colonies. On the fiscal side, it might be shown how the particular methods of raising revenues were resorted to because of the existence and importance of the tobacco industry. The chief revenues came from an export duty and a poll tax; the export tax, besides being easily collected, was lucrative because so large a part of the chief crop of tobacco was exported. The ease with which it could be collected, and the difficulty of concealing the commodity in attempting to escape taxation, partly explains also the wide use of taxes on tobacco by the European government. ”

“At the outbreak of the American Revolution, tobacco was second on our list of exports in value, reaching in 1775 over one hundred million pounds, or about four million dollars. This product alone represented over 75% of the total value of goods exported from Virginia and Maryland. As a result of our independence, over 75% of this tobacco was carried directly to the continent, no longer exclusively in English vessels or by English merchants, but by Dutch and French ships as well. England´s revenues from her impost on tobacco was a handsome one. The tariff rates were very high, averaging from two hundred per cent to four hundred per cent ad valorem duty.  As early as 1686 with a duty of four and three quarter pence per pound, (the price of tobacco being about two pence) she received from this source exclusively about two million dollars. In 1764 the Crown of England thought it worth while to pay three hundred and fifty thousand dollars for the seigniorial right over the Isle of Man to prevent smuggling into England via that place. In 1700 it reached three millions five hundred thousand dollars. So far as the revenue on tobacco consumed in England is concerned, England lost nothing by our independence. Social wealth, however, she did lose by the shifting of trade profits from the pockets of English Merchants to Continental Merchants. The Tobacco trade of Glasgow, which had been the leading tobacco center of the world, was ruined.

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