The outgoing Whig Government left Peel to deal with prolonged economic depression, which let open threats from radical movements like the Chartists. They also had left huge budget deficit Peel therefore concentrated on a policy of economic improvement through the implementation of on . In moving towards free trade, Peel created a foreign trade revival which led to an and a decrease in and caused a fall in support for s. Peel was also conscious that the British economy was should be made more efficient and to this end introduced controls over the printing of banknotes and the registration of companies. In 1846, the finally gave Peel an excuse to repeal the , which he felt were an anachronism which needed to be removed, as other tariffs had been, in order to allow continued both in and . Peel's economic focus was maybe a logical extension of his background in industry, but it won him many enemies who saw it as an obsession. Peel was seen as a Prime Minister rather than a Tory, which obviously made him unpopular with Tories.
Peel introduced an income tax in the Income Tax Act 1842. Peel, as a Conservative, he had opposed income tax in the 41 general election, but a growing budget deficit required a new source of funds. The income Tax was introduced as a temporary measure for 3 years. The tax was to be imposed at the rate of 7d in the pound on annual incomes greater than £150, which would exempt working-class wage earners. This was a difficult political decision by Peel because Property owners resented the idea of a sate intrusion into their private finances. The rate of the tax was carefully chosen to ensure that virtually none of the working class had to pay it. The tax was going t contribute £3.7 million towards new revenue of £4 million raised to eliminate the deficit. The customs duties were reduced on about 750 of 1,200 items in contrast. Peel asked the wealthier classes to make an additional contribution so that the ‘Labouring classes of society might not be further burdened’. On the issue of income tax I believe Peel acted as a statesman because he went behind the members of his party as most of them were the aristocratic and the rich. Peel saw the needs of the Country he saw the deficit and poverty at the time and wanted to draw out of this situation. The country was also economically instable because people who had money could not put it in banks as they did not trust them. Peel also embedded more faith into the banking system because banks had to be registered and legal to trade this was known as The Companies Act aimed to prevent 'reckless speculation' and to prevent the establishment of dubious companies by making it compulsory for all companies to be registered officially. The companies also had to issue prospectuses and publish accounts regularly. By peel introducing the income tax he also gave things back like putting faith in banking.
The Bank Charter Act 1844 restricted the powers of British banks and gave exclusive note-issuing powers to the central . Under the act, no bank other than the Bank of England could issue new , at the same time the Bank of England were restricted to issue new banknotes only when these were 100% backed by gold. The act restricted the supply of new notes reaching circulation, but also gave the Bank of England an effective monopoly on the printing of new notes.
