A modified version of the Molasses Act (1733), the Sugar Act (1764) was intended to help defray the national debt incurred by the French and Indian War, by reducing the rate of tax on molasses from six pence to three pence per gallon, and establishing measures to actually enforce the duty. The act also listed more foreign goods to be taxed including sugar, certain wines, coffee, pimiento, cambric and printed calico, and further, regulated the export of lumber and iron. The enforced tax on molasses caused the almost immediate decline in the rum industry in the colonies. The combined effect of the new duties was to sharply reduce the trade with Madeira, the Azores, the Canary Islands, and the French West Indies (Guadelupe, Martinique and Santo Domingo), all important destination ports for lumber, flour, cheese, and assorted farm products. The situation disrupted the colonial economy by reducing the markets to which the colonies could sell, and the amount of currency available to them for the purchase of British manufactured goods.

The present draft contains several significant differences from the printed act passed on 5 April 1764: it does not include clauses XXII, XXXVI and XXXIX which appeared in the final version; American territorial waters are defined in this draft as 3 leagues while the final version read as 2 leagues (XXXIII, p. 47); clause XXXIV is largely rewritten; there are many blanks left in the text for penalties and dates of implementation of the act.