Tax History - Boston Tea Party

History of Accounting > Tax History > The Boston Tea Party, America’s First Tax Revolt

The Boston Tea Party is one of the most compelling and famous of the
tax revolts that have taken place in America. At the time, it was a protest
against the British government who controlled the country, by the colonists
who resided in Boston Massachusetts.

The revolt took place after many years of simmering discontent on the
part of the colonists. They were upset because they were being taxed, but
were not permitted to have any representation in the Parliament that was
producing the legislation creating the taxes.

By the 17th century, the colonists as well as the Europeans had developed
quite a strong fascination for the taste of tea. Because of this, many
companies were formed to import the tea. In 1698, the English Parliament
gave the East India Company the sole right to import tea into Britain, thus
creating a monopoly. In 1721, the English Parliament passed another law,
which stated that all tea must be imported into the colonies from Great
Britain.

The East India Company was not allowed to export tea by law, but had to
sell it at auctions in England to British merchants, who would later exported
it to the colonies. Once the tea finally reached the colonies, it was then
resold once again to other British merchants, who then distrusted to cities
like Philadelphia, Boston, Charleston, and New York.

At the time, the East India Company was required to pay an ad valorem
tax of 25% on any tea that it imported into Great Britain. The Parliament,
which was in need of additional capital, later created a new tax on the
consumption of tea.

Because of these very high taxes, and the fact that the Dutch government
did not tax tea, a market for smuggled Dutch tea was created. By the
1760’s, the East India Company was losing £400,000 per year because of
these smuggling operations.

The Boston Tea Party was a protest against the English government for
many reasons. Some of them were the high taxes they were forced to pay,
the lack of say so in legislation that created the taxes, and the fact that tea
was a commodity that they enjoyed by countless people which was being
priced so high, that many of them could no longer afford it.

The British government requested and was later refused by the colonist,
the return of three shiploads of taxed tea to Britain. On December 16,
1773, a group of protestors boarded these ships and threw the tea into the
Boston Harbor. In many ways, this was the very start of the revolution that
later lead to the War of Independence.

Since the Boston Tea Party, there have been many other tax protests
or revolts take place in America. But, this will always be remembered in
history has the first of these types of events, and will be the inspiration
in the future for American citizens to stand up and fight against the
government whenever they feel that their legal rights are being trampled
upon.

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