Abstract

Since Edwin Seligman (The Shifting and Incidence of Taxation, 1899), fiscal historians have known that eighteenth-century English economic writings contained a diversity of opinion about the probable economic incidence of indirect taxation, particularly the excise on beer and ale. For contemporaries, the stakes were high. The excise (an unpopular and contentious tax) accounted for about a quarter of the total public revenue of Great Britain. According to Gregory King (1695), households spent more on beer and ale than any other single item, and a significant portion of the agricultural produce of the kingdom was consumed in its production (Mathias, 1959 [1992]). For modern economic historians, accurate measurement of the economic incidence of the excise would permit meaningful comparison of the relative fiscal capacities of the British and French states (Mathias and O’Brien, 1976; 1978; McCloskey, 1978). More importantly, without accurate measurements of incidence, it is impossible to assess the effects of the tax on industrialization of the brewing industry and on the organization of eighteenth-century British agriculture.

Thirty years ago, when the question was first floated, economic historians lacked both the methodological tools and the necessary price and wage data to perform even rudimentary partial incidence analysis. Inspired by Mark Spoerer’s successful resolution of the Laspeyres-Paradox (2008), this paper performs a historical analysis of incidence and attempts to measure the effects of the tax on the organization of the brewing industry. My results show statistically significant ‘forward shifting’ at ordinary levels of the duty. Limited ‘back shifting’ is evident only at extraordinary duty levels. Substitution effects do not appear significant. The author would welcome suggestions for refinement of the models used to assess the effects on the brewing industry.