By 1763, Great Britain possessed vast holdings in North America. In addition to the thirteen colonies, twenty-two smaller colonies were ruled directly by royal governors. Victory in the Seven Years' War had given Great Britain New France (Canada), Spanish Florida, and the Native American lands east of the Mississippi River. In 1765 , the colonists still considered themselves loyal subjects of the British Crown, with the same historic rights and obligations as subjects in Britain.
The British did not expect the colonies to contribute to the interest or the retirement of debt that happened during the French and Indian War, but they did expect a portion of the expenses for colonial defense to be paid by the Americans. Estimating the expenses of defending the continental colonies and the West Indies to be approximately £200,000 annually, the British goal after the end of this war was that the colonies would be taxed for £78,000 of this amount.
The point for London was that the tax demonstrated that Parliament was in full control. The issues with the colonists was not that the taxes were high (they were low) but that the colonies had no representation in the Parliament which passed the taxes.
Lord North in 1775 argued for the British position that Englishmen paid on average twenty-five shillings annually in taxes where the Americans paid only sixpence.
The slogan "No taxation without representation" became popular in many American circles. London argued that the colonists were "virtually represented"; but most Americans rejected this.