In 1764 Parliament passed the Sugar Act, with the goal of raising 100,000 pounds, an amount equal to one-fifth of the military expenses in North America. The Sugar Act signaled the end of colonial exemption from revenue-raising taxation. Previous acts, such as the long-standing Navigation Acts, had been passed as protectionist measures, regulating trade to boost the economy of the British Empire as a whole. Under the Navigation Acts, taxes were paid by British importers alone, rather than the colonists, and brought in just 1,800 pounds in 1763, compared with a cost of 8,000 pounds just to enforce the acts.

The Sugar Act lowered the duty on foreign-produced molasses from six pence per gallon to 3 pence per gallon, in attempts to discourage smuggling. The act further stipulated that Americans could export many commodities, including lumber, iron, skins, and whalebone, to foreign countries, only if they passed through British ports first. The act also placed a heavy tax on formerly duty- free Madeira wine from Portugal.

The Sugar Act complicated trade for American shippers by requiring them to fill out a number of confusing forms in order to legalize their shipments. If even the smallest technicality was not attended to, ships' captains could have their entire cargo seized. Further, the act could be employed in some cases regarding local trade along the east coast, and in many cases put unrealistic restrictions on this trade.

In addition to a restriction of trade, many colonists felt the Sugar Act constituted a restriction of justice. The act allowed customs officials to transfer smuggling cases from colonial courts with juries to juryless vice- admiralty courts in Halifax, Nova Scotia. Until 1768, vice-admiralty judges were awarded five percent of all confiscated cargo and ships, a clear incentive to come to a guilty verdict. The vice-admiralty courts also reversed traditional judicial ideology, by burdening the defendant with the task of disproving the charge of smuggling rather than assuming innocence until guilt was proven.

British Prime Minister George Grenville ordered the navy to enforce the Sugar Act, and it did so vigorously. Still colonists continued to smuggle molasses until 1766, when the duty on foreign molasses was lowered to one penny. The Sugar Act provided the British treasury with about 30,000 pounds per year between 1766 and 1775, a substantial source of income.

Nine provincial legislatures in America protested the passage of the Sugar Act, but seven of these objected on narrow grounds. Though many colonists objected to the act's revenue-raising taxation and regulation, opposition was minor, due to a lack of organization and the hesitancy of the legislatures to take a stand against Parliament.

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