Investing in Fiscal Capacity: Legislative Debates, Military Pressures and Tax Policy in the United Kingdom (1803-1913)

Abstract

Numerous studies show an association between military pressures andfiscal development, often based on cross-national correlations between wars and fiscal outcomes (e.g., tax ratios). However, investments infiscal capacity may take time to yield higher tax revenues, obscuring the importance of factors that contributed to those investments. This article shifts attention from fiscal outcomes to the policy-making process. Using text-as-data techniques to analyze British parliamentary debates from1803 to 1913, it offers new micro-level evidence of the relationship between military pressures and fiscal policy-making in the United Kingdom during the long nineteenth century. Our analyses show that military issues were associated with higher fiscal salience and lower contestation in tax debates. Qualitative analyses indicate that military issues were recurrently invoked to support the renewal of the personal income tax despite attempts to repeal it, confirming the close link between military and fiscal issues in shaping the modern British fiscal state.