In 1689, the English Parliament passed the Bill of Rights, establishing constitutional monarchy and limiting the Crown's power to levy taxes without parliamentary approval. However, the wording around naval funding and royal prerogatives created an unintended legal framework. Parliament sought to strip King William III of his power to maintain a standing army and impose emergency ship-money taxes during peacetime.
To ensure maritime trade continued without heavy royal levies, lawmakers included specific tax exemptions for merchant ships equipping themselves for self-defense. Creative private maritime operators quickly recognized that by declaring their cargo vessels as defensive units operating under private commissions, they could bypass parliamentary customs duties entirely. Furthermore, the crown's reduced naval budget forced the monarchy to rely heavily on letters of marque to police trade routes.
Because the newly defined tax code exempted prize goods captured by commissioned private vessels under defensive pretenses, state-sanctioned piracy turned into a tax-haven industry overnight. Merchant captains routinely provoked skirmishes with foreign vessels, claimed self-defense, and returned to port with plunder exempt from standard crown tariffs. It took over a decade of legislative amendments to close the maritime tax loopholes created by the revolutionary bill.