The Revolution of 1688 may be regarded both on its constitutional and financial sides as the completion of the work of the Long Parliament. In the latter respect its chief effects were: (1) the transfer of the administration of the finances from the king's nominees to officials under parliamentary control, (2) the consequent application of the revenue to the purposes designated by parliamentary appropriation, (3) the rapid expansion of the various kinds of revenue, particularly the indirect taxes, (4) the rise and growth of the national debt, combined with the creation of an effective banking system. The greater part of the 18th century was occupied with the working out of these results.
The government of William III. had to face the expenses of a great war and to allay discontent at home. As a preliminary step to the necessary settlement of the revenue a return was prepared, showing the tax receipts at over £1,800,000 and the peace expenditure at about £1,100,000. Parliament accepted the view that £1,200,000 per annum would suffice for the ordinary requirements of the kingdom. It, further, introduced the system of the Civil List (q.v.) and assigned £600,000 for the fixed payments placed under that head, leaving the remainder to be appropriated for the other needs of the state. As the "hearth money" had proved to be a very unpopular charge, it was, in spite of its yield (£170,000), given up. The temporary excise duties were voted for "their majesties' lives" and the customs for a limited term. These branches of revenue were altogether insufficient to meet the pressure of the war outlay, and in consequence new heads of taxation--or old ones revived--came into use. A series of poll and capitation taxes were imposed between 1689 and 1698, but were after that date abandoned for the same reason as that for the repeal of the hearth money. The monthly assessment was tried in 1688; then came an income tax followed by "twelve months'" assessments in 1690 and 1691. The way was thus prepared for the property tax of 1692, imposing a rate of 4s. in the pound on real estate, offices and personal property. The old difficulties of securing returns made the tax chiefly one on land. It was under the name of "the land tax" that it was generally known. The 4s. rate brought in £1,922,712, a return which declined in the following years. To meet this a fixed quota of nearly half a million (a 1s. rate) was adopted in 1697, the amount to be apportioned in specified sums to the several counties and towns. The framework of the tax remained without substantial change till 1798, the time of Pitt's redemption scheme. In 1696 houses were taxed 2s. each, with higher rates for extra windows. The beginning of the "window tax," licences on pedlars, and a temporary tax on the stocks of companies complete the imposts of this kind. Stamp duties--imitated from Holland--were adopted in 1694 and extended in 1698: they mark the beginnings of the modern duties on transactions and the "death duties." Large additions were made to the excise. Breweries and distilleries were placed under charge, and such important commodities as salt, coal, malt, leather and glass were included in the list of taxable articles, but the two last mentioned were soon relieved for the time. The customs rates were also increased. In 1698 the general 5% duty was raised by the new subsidy to 10%. French goods became liable to surtaxes, first of 25%, afterwards of 50%; those of other countries had to pay similar charges of smaller amount. Spirits, wines, tea and coffee were taxed at special rates. How great was the expansion of the fiscal system may be best realized from the fact that during the comparatively short reign of William III. (1689-1702) the land tax produced £19,200,000, the customs £13,296,000, and the excise £13,650,000, or altogether £46,000,000. In the last year of the reign, the opening one of the 18th century, the returns from these taxes respectively were: land tax (at 2s.), £990,000, customs £1,540,000, excise £986,000, or a total exceeding three and a half millions. The removal of the regular export duties in respect of (a) domestic woollen manufactures, (b) corn, was the only alleviation of taxation, and in both cases it was due to special reasons of policy.