Tax farming was originally a Roman practice whereby the burden of tax collection was reassigned by the Roman State to private individuals or groups. Ancient Rome was a Civilization that grew out of a small agricultural community founded on the Italian Peninsula as early as the 10th century BC A tax collector is a person who collects unpaid Taxes from other people or corporations In essence, these individuals or groups paid the taxes for a certain area and for a certain period of time, and then attempted to cover their outlay by collecting money or salable goods from the people within that area. [1] The system was set up by Gaius Gracchus in 123 BC primarily to increase the efficiency of tax collection within Rome itself but the system quickly spread to the Provinces. Gaius Sempronius Gracchus ( Latin: C·SEMPRONIVS·TI·F·P·N·GRACCVS (154 BC-121 BC was a Roman politician of the 2nd century BC Rome ( Roma ˈroma Roma is the capital city of Italy and Lazio, and is Italy's largest and most populous city with more than 2 In Ancient Rome, a province (Latin provincia, pl provinciae) was the basic and until the Tetrarchy (circa [2] nh(07)
Within the Roman Empire, these private individuals and groups that collected taxes in lieu of the bid they had paid to the state were known as publicani, of whom the best known is probably St. Matthew, a publicanus in the village of Capernaum in the province of Judaea. In antiquity, publicans ( Latin publicanus (singular publicani (plural were public contractors in which role they often supplied the Matthew the Evangelist (מתי/מתתיהו "Gift of Yahweh " Standard Hebrew and Tiberian Hebrew: Mattay or Mattithyahu Kingdom of Judea redirects here For the 10th-6th century BCE kingdom see Kingdom of Judah Iudaea ( Hebrew: יהודה Standard The system was widely abused, and reforms were enacted by Augustus and Diocletian. Augustus ( Latin: IMPERATOR·CAESAR·DIVI·FILIVS·AVGVSTVS September 23 63 BC – August 19 AD 14) born Gaius Octavius Thurinus, was Gaius Aurelius Valerius Diocletianus ( ca. December 22 244 The modern historian Timothy Barnes takes December 22 as his birthdate [3]
Tax farming is not identical with privatized tax collection, where private individuals or groups collected taxes and give them to the state in return for a fee. Privatized tax collection occurs wherever the state passes on its obligation to collect Taxes to private companies or firms in return for a fixed or ad valorem fee Tax farming is speculative, meaning that the private individual or group must invest their own money initially to pay off the tax debt, against the hope of collecting a larger sum subsequently (hence "farming"). Speculation, in a financial context is making an investment that increases the overall risk in a portfolio
Contents |
History
Besides the Romans, historical examples include the tax collection methods of the Ptolemies, Seljuks, Mamluks, Ottomans, and the French State prior to Louis XVI. The Ptolemaic dynasty (sometimes also known as the Lagids, from the name of Ptolemy I's father Lagus) was a Hellenistic Macedonian royal family The Great Seljuq Empire was a Medieval Sunni Muslim empire established by the Qynyq branch of Oghuz Turks that once controlled The Ottoman Empire (1299–1923 ( Old Ottoman Turkish: دولتْ علیّه عثمانیّه Devlet-i Âliye-yi Osmâniyye, Late Ottoman and Modern Turkish This article is about the country For a topic outline on this subject see List of basic France topics. Louis XVI ( 23 August 1754 – 21 January 1793) Louis-Auguste de France, ruled as King of France and Navarre In many cases, such as the Abbasid practice of Iqta, these rights were granted by an authority, in this example the caliph, for services rendered or promised. Tax farming was originally a Roman practice whereby the burden of Tax collection was reassigned by the Roman State to private individuals or groups The Caliph is the Head of state in a Caliphate, and the title for the leader of the Islamic Ummah, an Islamic community ruled by the Shari'ah In the Byzantine pronoia system, similar rights were often purchased from the crown. For other uses of the term pronoia, please see Pronoia (disambiguation. [4] Though such arrangements in some respects seem similar to the feudal system, there are significant disparities, including continuance of state power and, at least in the case of pronoia, theoretical time limits on the grant. In many cases, including those mentioned, tax rights were not transferable or divisible, unlike feudal fiefdoms. Under the system of Feudalism, a fiefdom, fief, feud, feoff, or fee, often consisted of inheritable lands or revenue-producing
Pros and cons of tax farming
Tax farming was historically an important step in the development of state revenues and economic growth by providing a method for collecting taxes across a large area without the need for a tax-collecting bureaucracy (or during periods when such a bureaucracy is unworkable or impossible to maintain). Economic development is the development of economic wealth of countries or regions for the well-being of their inhabitants Bureaucracy is the structure and set of regulations in place to control activity usually in large organizations and government As such, systems of tax collection more or less similar to Roman tax farming were used in Pharaonic Egypt, various medieval Western European countries, the Ottoman and Mughal Empires, and in Qing Dynasty China. Ancient Egypt was an Ancient Civilization in eastern North Africa, concentrated along the lower reaches of the Nile River in what is now The Ottoman Empire (1299–1923 ( Old Ottoman Turkish: دولتْ علیّه عثمانیّه Devlet-i Âliye-yi Osmâniyye, Late Ottoman and Modern Turkish The Mughal Empire ( Persian and self-designation گورکانی; مغلیہ سلطنت) was an Islamic imperial power which ruled most Not to be confused with Qin Dynasty, the first dynasty of Imperial China On the other hand, as states become stronger, buoyed up by revenues brought in by tax farming, tax farming was discarded in favour of centralized tax collection systems. In part this was because tax farming systems tended to rely on wealthy individuals outside the state machinery, gangs, and secret societies. Gangsters redirects here For the computer game see Gangsters (video game. Secret society is a term used to describe a variety of organizations [5]
The key flaw in the tax farming system is the tension between the state, which wants a long-term source of taxation revenue, and the tax farmers, interested in making a profit on their investment in as short a time as possible. As a result tax-farmers often abuse the taxpayers in various ways, such as deliberately undervaluing goods paid to them in lieu of taxes, which allows the the tax-farmers to re-sell those goods at maximum profit. However, such abuses stifle economic growth, limiting the quantity of taxes generated over the long-term.
Tax farming in modern days
In practice tax farming is not outdated as yet. In many countries, including Bangladesh and India, collection of toll on bridges or other public properties like lakes and forests, is often entrusted to private persons or a firms to avoid the problems related to the collection of revenue. In 1999, the National Board of Revenue in Bangladesh (NBR) negotiated with the cigarette producing firms the minimum amount of Value Added Tax (VAT) that should be paid per month, although VAT was an ad valorem tax. Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. NBR took this attempt, since under the self-clearance system, monitoring of production and sales of cigarettes proved to be difficult. It was negotiated that if the cigarette producing firms paid the minimum revenue fixed by NBR, physical monitoring would be withdrawn. NBR resorted to this technique of tax farming to avoid the unbearable costs of monitoring, while gaining more in revenue with certainty. [6]
See also
References
- ^ Howatson M. A maona (from the Arabic Maounach) or Societas comperarum was a medieval Italian association of Investors formed to manage the purchased Privatized tax collection occurs wherever the state passes on its obligation to collect Taxes to private companies or firms in return for a fixed or ad valorem fee In antiquity, publicans ( Latin publicanus (singular publicani (plural were public contractors in which role they often supplied the The Ferme générale was in ancien régime France, essentially a franchised customs and excise operation which collected duties on behalf of the king C. : Oxford Companion to Classical Literature, Oxford University Press, 1989, ISBN 0198661215
- ^ Balsdon J. : Roman Civilization, Pelican, 1965
- ^ Roman-taxes at unrv.com
- ^ Timothy E. Gregory, A History of Byzantium (Malden, MA: Blackwell, 2005)
- ^ John Butcher and Howard Dick, The Rise and Fall of Revenue Farming: Business Elites and the Emergence of the Modern State. St. Martin's Press, 1993
- ^ Chowdhury, Faizul L. NBR's attempt at Tax Farming - fixed amount of VAT on Cigarettes in 1999, 2007 : Desh Prokashon, Dhaka.
Further Reading
- Chowdhury, F. L. (2007): NBR's attempt at Tax Farming - fixed VAT on Cigarettes in 1999, Desh Prokashon, Dhaka.
- Levi, M. Of (1988), Rule and Revenue, California Series on Social Choice and Political Economy (13), University of California Press.
- Stella, P. , (1992) Tax Farming: A Radical Solution for Developing Country Tax Problems? (September 1992). IMF Working Paper No. 92/70.
External links
Dapyx Software network: MP3 Explorer | Ebook Manager | Zenithic