Reviewing holstroms efficiency argument
For a separate principal to capture the residue from the proceeds of marketed products
From associated producers
The state could be the sole " exploiter "
Tax farming existed for centuries ...no ?
Analogy ?
TAX FARMING
Tax farming is the principle of assigning the responsibility for tax revenue collection to private citizens or groups. Tax farming occurred in Eygpt, Rome, Great Britain, and Greece. The principle was considered very effective for tax revenue collection but suffered from a tendency of the tax-farmers to abuse the taxpayer for collection. Only when the system included checks and balances for the tax-farmer as well as the taxpayer did the system seem truly successful. Thepublicani of Rome were known as some of the most abusive tax-farmers. Tax farmers bid at auction for the contract rights to collect a particular tax and was held responsible for any loss. In Eygpt taxes for collected very effectively without tax farmers until the Greek Ptolemies set up rule. Under the Ptolemies the tax-farmer watched over the taxpayer and the government tax collector to prevent the scribes from imposing lighter taxes on the poor and unfortunate.
Return to History Page
The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or. Ideologically biased.
Tax Farming
a system for collecting taxes and other state revenues from the population. Under this system, the statetransfers 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 orthree times the amount deposited in the treasury.
Tax farming is characteristic of precapitalist systems in which a natural economy is predominant, creditis not developed, the state is in financial difficulties, and communications are poor. Three forms of taxfarming existed: (1) general, which encompassed a country or the entire tax system; (2) regional, whichencompassed a single city or region; and (3) special, which dealt with individual taxes, such ascustoms 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 thefourth century B.C. In the Middle Ages, it was widespread in France from the 13th century and was alsopracticed widely in Holland, Spain, and England. It was one of the most important sources for theprimitive accumulation of capital. As capitalism developed, tax farming was preserved in a distinctiveform in 20th-century Italy, where private and savings banks collected certain taxes. In the late 19th andearly 20th centuries, forms of tax farming were used for collecting tax arrears in the USA. Tax farmingwas widely used in the Ottoman Empire beginning in the late 16th or early 17th century; it wasabolished in 1925. It was also widely practiced in Iran from approximately the tenth century to the1930’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 usedespecially for customs duties and salt and liquor revenues. Tax farming to collect liquor revenues wasintroduced in the 16th century and assumed the greatest importance during the 18th and 19thcenturies. Treasury revenues from the liquor tax constituted more than 40 percent of the income fromall taxes in the state budget. In 1863 tax farming to collect liquor revenues was abolished and replacedby an excise tax.
