The Sugar Act was a law passed by the British Parliament in 1764 that established a tax of three pence per gallon on foreign molasses imported by British colonial subjects. The Sugar Act also established taxes on foreign coffee, sugar, pimiento and select wines, and limited the colonists' ability to export lumber and iron to the French West Indies.
The Sugar and Molasses Act of 1733, which taxed molasses at a rate of six pence per gallon, and which had proved extremely difficult to enforce, was about to expire. By lowering the tax rate and including greater enforcement provisions, Parliament hoped to secure more income for the Crown.
The Seven Years War, or French and Indian War, saw Great Britain's national debt balloon and underscored the need for a stronger British military presence in the colonies. When the war ended in 1763 Britain decided it would need a standing army of 10,000 to protect its interests in the New World.
Lord Greenville, Britain's first Lord of the Treasury, strengthened the British naval presence in the colonies and made customs enforcement a top priority.
The tax on molasses immediately cut into the colonial rum industry's profits by raising the cost of importing sugar from the French West Indies. The new regulations on the export of lumber also had a negative effect on New England's economy.
Colonists, especially New England merchants, were dismayed by the economic impact of the Sugar Act because the rising cost of molasses reduced their profit margins. Their reaction, however, took mostly non-violent forms. It was not until the Stamp Act was passed in the following year that vigorous protest and violence broke out in the Colonies.