The Sugar Act was enacted on April 5, 1764, in order to help reduce the staggering national debt incurred during the French and Indian War and to help pay for the continued presence of British troops in the colonies to defend from any further attacks. The two main thrusts of the Act were to actually collect the taxes that had been in place, but skirted around for so long, and to force the colonists to trade with Britain and her colonies instead of foreign powers, in an effort to boost the ailing British economy.
In April 1763, George Grenville succeeded Lord Bute as Prime Minister and he set about creating a policy to reduce the national debt. Before the French and Indian War, which lasted from 1756 - 1763, the British national debt was only 72,000,000 pounds. By January 1763, the debt had skyrocketed to almost 130,000,000 pounds.
After the French and Indian War, Britain posted 10,000 soldiers in the colonies to protect them from further incursions by Indians or other foreign powers. Lord Grenville's Sugar Act sought to get the colonists to contribute to the costs of this defense, a proposition that wasn't necessarily disagreeable to the colonists, but it was the way in which he went about it that caused them great consternation. The colonists did not mind being taxed by their own elected colonial legislatures, but Parliament was taxing them and they had no representatives in Parliament. This is the origin of the revolutionary battle cry, taxation without representation.
The Sugar Act marked the first time Parliament tried to directly tax the colonists. It was generally considered fair on both sides of the ocean for Parliament to regulate trade within the British Empire. Duties on imported goods were paid by shippers and were not a direct tax on consumption. The Sugar Act, however, was viewed as a direct tax on the consumption of many popular items including sugar, wine, textiles, tropical foods, silk and numerous other items, and had, as its stated purpose, the purpose of raising revenue for the Crown. This intent is stated clearly in the preamble of the Sugar Act:
"It is expedient that new provisions and regulations should be established for improving the revenue of this Kingdom... and... it is just and necessary that a revenue should be raised... for defraying the expenses of defending, protecting, and securing the same."
You can read the entire Sugar Act text here.
This angered the colonists because it seemed that Parliament wanted to use them for its own good. It may seem reasonable to expect that the colonists would be partly responsible for the expenses of their own defense. The colonists were not opposed to this. However, Parliament placed this tax directly on them, which violated the British political principle that taxes could only be levied if they were agreed upon by the common people through their elected representatives. The colonists had no elected representatives in Parliament and had been taxed only by their own colonial legislatures for over a hundred years. Thus the root of the conflict was whether or not Parliament had the right to tax the colonists.
In addition to the right of taxation question, colonists were angered and alarmed because the newly enforced taxes caused great economic hardship by raising the prices of many common goods, reducing foreign markets to which they could export their goods and creating burdensome trade regulations.
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