Tax Farming

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Tax Farming

 

a system for collecting taxes and other state revenues from the population. Under this system, the state transfers the right of collection to private individuals called tax farmers in exchange for a certain fee. Tax farmers accumulated great wealth since the taxes and charges they collected exceeded by two or three times the amount deposited in the treasury.

Tax farming is characteristic of precapitalist systems in which a natural economy is predominant, credit is not developed, the state is in financial difficulties, and communications are poor. Three forms of tax farming existed: (1) general, which encompassed a country or the entire tax system; (2) regional, which encompassed a single city or region; and (3) special, which dealt with individual taxes, such as customs duties or revenues from the liquor monopoly.

Tax farming first became widespread in Iran in the sixth century B.C. and in Greece and Rome in the fourth century B.C. In the Middle Ages, it was widespread in France from the 13th century and was also practiced widely in Holland, Spain, and England. It was one of the most important sources for the primitive accumulation of capital. As capitalism developed, tax farming was preserved in a distinctive form in 20th-century Italy, where private and savings banks collected certain taxes. In the late 19th and early 20th centuries, forms of tax farming were used for collecting tax arrears in the USA. Tax farming was widely used in the Ottoman Empire beginning in the late 16th or early 17th century; it was abolished in 1925. It was also widely practiced in Iran from approximately the tenth century to the 1930’s and in India from the 13th or 14th century to the 19th century.

In Russia, tax farming (otkup) was introduced in the late 15th or early 16th century. It was used especially for customs duties and salt and liquor revenues. Tax farming to collect liquor revenues was introduced in the 16th century and assumed the greatest importance during the 18th and 19th centuries. Treasury revenues from the liquor tax constituted more than 40 percent of the income from all taxes in the state budget. In 1863 tax farming to collect liquor revenues was abolished and replaced by an excise tax.

References in periodicals archive ?
The tax farmer himself often became extraordinarily wealthy.
The first chapter is concerned with this biography, especially facts such as the situation of her parentage (her probable father was a wealthy, noble tax farmer who was her mother's lover), establishing young Jeanne-Antoinette Poisson as one of the newly privileged middle-class.
This is a mansion (hotel) built in 1656 for a rich salt tax farmer--in the ancien regime all tax farmers were of their nature and profession unpopular and well-to-do.
He offended Prince Christian of Denmark, who had escorted him to Versailles to present a score of Iphigenie to Louis XV and asked for his reaction to the king's cordial reception, by declaring that he would dedicate his next opera to a tax farmer, who would pay him ducats instead of compliments.
refers to the "missing millions," his perspective seems to be that of a tax farmer or claim jumper.
She goes beyond her evidence, and the scope of her study, in the conclusion, to espouse the benefit of the tax farmer over the sipahi in delivering a greater share of the rural surplus to the market.
The Centre is probing cases of "some prominent people" evading taxes in the garb of agricultural income, but there is no proposal or move to tax farmers, finance minister Arun Jaitley said in Rajya Sabha last week JD(U)'s Sharad Yadav and BSP's Mayawati said the Central Board of Direct Taxes had asked its officials to verify the genuineness of agricultural income claims exceeding Rs 1 crore made by taxpayers in their income-tax (I-T) returns, as reported by TOI in its March 13 edition "There are many prominent people who have done this and the probe is on against them.
In enforcing their monopolies, these tax farmers enjoyed the power to arrest, detain and prosecute illicit distillers and smugglers; they were, that is, quasi-officials of the state.
These practices formed domains of political power relations whereby different actors with diverse ethnic and religious identities faced each other as tax farmers, administrators, sharecroppers, or peasants; they were fundamentally involved in casting and recasting the terms of domination or subjugation.
Notably, the military-administrative class, who controlled agricultural resources as tax farmers, entered into partnerships with local or European merchants to exploit commercial prospects.
In addition to generating higher revenues for the state budget while reducing the actual tax farmers pay by half and thus helping stamp out the black economy, the recently announced fiscal change should also create the right incentives to solve another issue investors in agriculture have long complained about - farmland fragmentation.
They consider such topics as the Ottoman Empire between successors: thinking from 1821 to 1922, the non-Muslim tax farmers in the fiscal and economic system of the Ottoman Empire in the 19th century, late Ottoman state education, the last of the Cretan Muslims between the empire and the nation-state, conversion to Islam in Bulgarian historiography, and recent developments in the historiography of Bosnia and Herzegovina relating to the Ottoman Empire and their impact on history textbooks.