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American colonists were outraged over the tea tax, which had existed since the 1767 Townshend Revenue Act and did not get repealed like the other taxes in 1770, and believed the Tea Act was a tactic to gain colonial support for the tax already enforced.
The act granted the EIC a monopoly on the sale of tea that was cheaper than smuggled tea; its hidden purpose was to force the colonists to pay a tax of 3 pennies on every pound of tea. The Tea Act thus retained the three pence Townshend duty on tea imported to the colonies.
The act retained the duty on imported tea at its existing rate, but, since the company was no longer required to pay an additional tax in England, the Tea Act effectively lowered the price of the East India Company’s tea in the colonies.
The Boston Tea Party was certainly a tax protest, but it was not a protest against high taxes. In fact, it was sparked by a tax cut, not a tax hike. But rather than repeal all the Townshend duties, Parliament chose to retain the tax on tea, chiefly to underscore the government’s right to impose such a levy.
The tax on tea had existed since the passing of the 1767 Townshend Revenue Act. Along with tea, the Townshend Revenue Act also taxed glass, lead, oil, paint, and paper. Due to boycotts and protests, the Townshend Revenue Act’s taxes were repealed on all commodities except tea in 1770.
In 1773, the Tea Act was imposed – on top of the remaining Townshend Acts – which was the last straw for many colonists. Interestingly, the Tea Act did not impose any new taxes on the colonies, but it did keep in place the duty on tea imported to the colonies established by the Townshend Act.
With the passing of the Tea Act, the seventeen million pounds of unsold surplus tea the British East India Company owned could be sold to markets in the American colonies. The tea was to be shipped to the American colonies and sold at a reduced rate.
Prior to the Tea Act, the British East India Company Tea was required to exclusively sell its tea at auction in London. This required the British East India Company to pay a tax per pound of tea sold which added to the company’s financial burdens.