Economic reforms

Question 1

What was Pitts difficult economic situation?

Answer 1

Britains Tax revenue = £13M
£8M of this is paid in interest of country debt = £234M

Question 2

What did Pitt establish to fix his problem and when?

Answer 2

Sinking fund that had previously been set by Sir Robert Walpole (PM)
reintroduced it in 1786

Question 3

What is the Sinking Fund?
4 steps

Answer 3

1) Sets aside £1M of gov money raised by tax
2) Special commissioners use that money to buy gov shares
3) Prices of shares lower on stock market than actual value
4) interest on the stocks then used to buy more shares

Question 4

Impact of the Sinking Fund?

Answer 4

National debt reduced by £10M by 1793

Question 5

Why was smuggling a problem for Pitt?

Answer 5

Thought that 40,000 smuggling during 1780s/90s
Most smuggled item was Tea
Teas important duties was 119%
Tea attractive to smuggle

Question 6

Pitts 3 solutions to fix this

Answer 6

• Slashed import duties on Tea to 25%
• The slightly lower gov revenue was made up by extending the window tax
• Hovering Act 1787 = customs officer allowed to search ships 12 miles offshore rather than limit of 6 miles

Question 7

Impact of Pits solution to smuggling

Answer 7

Fox tried to oppose Pitt complaining people would have to pay more tax on other products to make up for reduction of important duty on tea
Pitts actions success smuggling of tea almost completely.

Question 8

What was Pitts problem with tax revenue?

Answer 8

Only £13M not enough to pay off country’s debts

Question 9

What did Pitt do to increase tax revenue?

Answer 9

Favoured excise over customs
Introduced budget of 1785 increased tax in:
- carriages
- Bricks and Tiles
- Horse Saddles
Taxed retail shops too

Question 10

Impact of increasing Tax

Answer 10

Rise in gov revenue
With sinking fund the deceit inherited turned into a small surplus by 1792
Riots broke out of fear for customers to pay higher prices