Salt tax

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A salt tax refers to the direct taxation of salt, usually levied proportionately to the volume of salt purchased. The taxation of salt dates as far back as 300 BC, as salt has been a valuable good used for gifts and religious offerings since 6050 BC. The salt tax originated in China in 300 BC and became the main source of financing the Great Wall. [1] As a result of the successful profitability of the salt tax, its use would diffuse among governments across the world. France, Spain, Russia, England, and India were the main regions to follow the Chinese lead. Salt was used as a currency during the Roman Empire, and towards the end of their reign the Romans began monopolising salt in order to fund their war objectives. Salt was such an important commodity during the Middle Ages that governments would often incorporate the salt trade as a state enterprise. Salt is one of the longest standing sources of revenue for governments; the taxation policy was so successful due to the vital role of salt within the human diet. Salt taxes have been extremely influential in many of the political and economic revolts within history, [2] resulting in important historic events including the French Revolution, the Moscow Salt Riot, the Salt March in India, and the Salt Tax Revolt in Spain.

Contents

Timeline

Implications of salt tax

The implications of the salt tax were both positive and negative. Salt tax was highly profitable for governments and increased the living standards within many countries. The salt tax was also influential upon historic political events including the Salt March in 1930 and the French Revolution in 1790. The revenue from the salt tax allowed some governments to increase living standards: the Chinese government, for example, used the revenue from salt tax to fund the building of the Great Wall of China. [3] As a result of the salt tax, the price of salt skyrocketed, subsequently meaning many individuals were unable to afford salt. Salt plays a large role in the human diet and salt starvation is a serious health issue which can result in vomiting, coma, and death. [4] Many believe that populations revolted against the salt tax through the French revolution and the Salt March as a result of the deaths associated with the lack of salt and high level of social disruption the tax caused. The Moscow Uprising and the Salt Tax Revolt had the highest death tolls and caused the most significant social disruption, however these salt taxations were quickly removed as a result.

Impacted regions

India

Today, India is one of the leading producers of salt in the world, coming in third behind the US and China. However, the British implementation of the salt tax in India was one of the highest of its kind. In 1835, the British East India Company implemented the first taxation of salt in India, the British East India Company was taken over by the crown in 1858 as a result of the plentiful revenue. Due to India's large population, not everyone was able to afford salt thus often resulting in salt deprivation, [4] many Indians died as a result of the expensive salt taxation, this and other surrounding political problems influenced the Salt March in 1930. The Salt March led by Mohandas Karamchand Gandhi was a protest in response to the unfair tax and standing up to the rule of the British Monarch, the protest resulted in the independence of India in 1947. [5]

England

During the Commonwealth period, the previously abolished salt tax was reintroduced in 1641. However, the tax was revoked in 1660 and not reinstated until 1693 under the reign of William III. The tax was originally set at two shillings a bushel on foreign salt, one shilling on native salt. However, in 1696 this was doubled and remained until it was abolished in 1825. [6] Salt tax was collected by over 600 officials at the time. The British salt tax was abolished in 1825 as a result of salt becoming an important mineral in the manufacturing processes evolving during the Industrial Revolution. Much of the impetus behind the repeal of salt duties came from manufacturers wanting to produce sodium carbonate from common salt through the Leblanc process, rather than extracting it from marine plants such as kelp or barilla. [7] Britain's salt act of 1882 prohibited Indians from collecting or selling salt, a staple in their diet.

China

Salt taxation in China dates back to 300 BC, and today China is one of the largest producers of salt in the world. Salt tax has played a large role in Chinese history and their economic development, as salt is considered an essential commodity, it is also one of their largest sources of government revenue . The tax revenue funded the development of the Great Wall, along with funding the Chinese army and several other government development projects. Private salt trafficking was very common in china as monopoly salt was more expensive and lower quality. [1]

France

The Gabelle was the French salt tax, initially implemented in 1360 and lasting, with brief revisions and lapses, until 1946. [8] The Gabelle originated as an indirect tax on agricultural commodities; however, from 1360 onward it was limited solely to the taxation of salt implemented by the French crown. [9] The Gabelle was one of the most unequal forms of revenue generation in the country's history, and was one of the main injustices of the French peasants, as the tax was based on one's social class, so small farmers and poorer urban people were the most affected by the taxation of salt. [10] Salt smuggling was extremely common in France due to the nature of the tax, as smugglers could buy salt in an area where it was cheap and sell it in an area where the legal price of salt was much higher. The Gabelle is said to have been a large contributing factor to the French Revolution. [2]

Roman Empire

Within the Roman Empire, salt was considered a fundamental part of empire building. The first of the great Roman Empire roads, the Via Salaria or Salt Road was built for transporting salt. [11] The Roman army required salt for their soldiers and horses and often Roman soldiers were paid in salt as it was seen as a valuable currency at the time. The word salary originated from the payment of salt to Roman soldiers and coined the term “worth his salt. ” The Roman government did not follow the influence of the Chinese and did not maintain a monopoly of salt. The Roman government however did not hesitate to control salt prices when they felt necessary, they often subsidised the price of salt to ensure commoners were able to access salt. In order to finance the war, the government did begin manipulating prices of salt in order to raise funds, despite this there remained a low price within the city of Rome.

Tax avoidance

Avoiding the high taxation of salt, many individuals smuggled salt in order to provide their families with salt and make profits of their own. Private salt trafficking occurred as monopoly salt was more expensive and of lower quality whilst local bandits and rebel leaders thrived on salt smuggling in both China and France. Smuggling salt was a very serious offence, individuals in French history were executed for salt-smuggling whilst in China offenders were often flayed alive. Whilst the tax remained in England, salt smuggling between Ireland and England was extremely common as Ireland had no salt tax thus Irish salt was smuggled into England. [12]

Tax Resistance

Tax resistance is the universal refusal to pay tax due to an opposition to the government that is imposing that tax, it is a direct action and if in violation of the tax regulations can be seen as civil disobedience. Tax resisters may accept that law commands them to pay taxes however they choose to resist taxation. The Salt March led by Mohandas Gandhi is a prime example of tax resistance and is one of the most recognisable tax resistances in history. [13]

Salt Tax Revolt

Between 1631 and 1634 the Salt Tax Revolt took place within the Spanish province of Biscay. The revolt was in response to economic conflict concerning the price and ownership of salt.[ citation needed ] The Revolt consisted of several violent incidents opposing Philip IV's taxation policy. The rebellion against the salt tax quickly progressed into a much broader protest against all economic inequalities under Philip IV's reign. The rebellion came to an end in the spring of 1634 as the main leaders of the protest were executed. However, Philip IV overlooked the rest of the group and decided to remove his original order concerning the price and ownership of salt in response to the rebellion.

The Moscow Salt Riot

In 1648 the Moscow Uprising, more commonly known as the Salt Riot began as a result of government implementation of a universal salt tax, replacing other taxes, with the intention of replenishing the state treasury. [14] The price of salt grew exponentially resulting in violent riots within Moscow. The Salt Tax fell mainly on the poorer sections within society, the riot was aggravated due to members of the elite finding ways to evade the tax, resulting in widespread corruption.

Examples

Notable examples of salt taxation throughout history include:

Salt tax in alternate form

In 2014, it is still illegal in certain provinces of China to use salt from a neighbor city. [16]

Related Research Articles

<i>Gabelle</i> Salt tax in France

The gabelle was a very unpopular French salt tax that was established during the mid-14th century and lasted, with brief lapses and revisions, until 1946. The term gabelle is derived from the Italian gabella, itself originating from the Arabic word قَبِلَ.

<span class="mw-page-title-main">Salt March</span> 1930 Indian protest led by Mahatma Gandhi

The Salt march, also known as the Salt Satyagraha, Dandi March, and the Dandi Satyagraha, was an act of nonviolent civil disobedience in colonial India, led by Mahatma Gandhi. The 24-day march lasted from 12 March 1930 to 6 April 1930 as a direct action campaign of tax resistance and nonviolent protest against the British salt monopoly. Another reason for this march was that the Civil Disobedience Movement needed a strong inauguration that would inspire more people to follow Gandhi's example. Gandhi started this march with 78 of his trusted volunteers. The march spanned 387 kilometres (240 mi), from Sabarmati Ashram to Dandi, which was called Navsari at that time. Growing numbers of Indians joined them along the way. When Gandhi broke the British Raj salt laws at 8:30 am on 6 April 1930, it sparked large-scale acts of civil disobedience against the salt laws by millions of Indians.

<span class="mw-page-title-main">Sugar Act</span> British legislation imposing import duties on American colonies

The Sugar Act 1764 or Sugar Act 1763, also known as the American Revenue Act 1764 or the American Duties Act, was a revenue-raising act passed by the Parliament of Great Britain on 5 April 1764. The preamble to the act stated: "it is expedient that new provisions and regulations should be established for improving the revenue of this Kingdom ... and ... it is just and necessary that a revenue should be raised ... for defraying the expenses of defending, protecting, and securing the same." The earlier Molasses Act 1733, which had imposed a tax of six pence per gallon of molasses, had never been effectively collected due to colonial evasion. By reducing the rate by half and increasing measures to enforce the tax, Parliament hoped that the tax would actually be collected. These incidents increased the colonists' concerns about the intent of the British Parliament and helped the growing movement that became the American Revolution.

<span class="mw-page-title-main">Tea Act</span> United Kingdom legislation

The Tea Act 1773 was an Act of the Parliament of Great Britain. The principal objective was to reduce the massive amount of tea held by the financially troubled British East India Company in its London warehouses and to help the struggling company survive. A related objective was to undercut the price of illegal tea, smuggled into Britain's North American colonies. This was supposed to convince the colonists to purchase Company tea on which the Townshend duties were paid, thus implicitly agreeing to accept Parliament's right of taxation. Smuggled tea was a large issue for Britain and the East India Company, since approximately 86% of all the tea in America at the time was smuggled Dutch tea.

The ferme générale was, in ancien régime France, essentially an outsourced customs, excise and indirect tax operation. It collected duties on behalf of the King, under renewable six-year contracts. The major tax collectors in that highly unpopular tax farming system were known as the fermiers généraux, which would be tax farmers-general in English.

<span class="mw-page-title-main">History of salt</span> Role in human culture

Salt, also referred to as table salt or by its chemical formula NaCl, is an ionic compound made of sodium and chloride ions. All life depends on its chemical properties to survive. It has been used by humans for thousands of years, from food preservation to seasoning. Salt's ability to preserve food was a founding contributor to the development of civilization. It helped eliminate dependence on seasonal availability of food, and made it possible to transport food over large distances. However, salt was often difficult to obtain, so it was a highly valued trade item, and was considered a form of currency by certain people. Many salt roads, such as the Via Salaria in Italy, had been established by the Bronze Age.

<span class="mw-page-title-main">Tax resistance</span> Refusal to pay a tax in opposition to a government or policy, rather than taxation itself

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<span class="mw-page-title-main">Boston Tea Party</span> 1773 American protest against British taxation

The Boston Tea Party was an American political and mercantile protest on December 16, 1773, by the Sons of Liberty in Boston in colonial Massachusetts. The target was the Tea Act of May 10, 1773, which allowed the British East India Company to sell tea from China in American colonies without paying taxes apart from those imposed by the Townshend Acts. The Sons of Liberty strongly opposed the taxes in the Townshend Act as a violation of their rights. In response, the Sons of Liberty, some disguised as Native Americans, destroyed an entire shipment of tea sent by the East India Company.

The Salt Industry Commission was an organization created in 758, during the decline of Tang dynasty China, used to raise tax revenue from the state monopoly of the salt trade, or salt gabelle. The commission sold salt to private merchants at a price that included a low but cumulatively substantial tax, which was passed on by the merchants at the point of sale. This basic mechanism of an indirect tax collected by private merchants supervised by government officials endured to the mid-20th century. The salt tax enabled a weak government to sustain itself; the government need control only the few regions that produced salt. Plans to end the government monopoly on salt by 2016 were announced in 2014.

<span class="mw-page-title-main">Excise</span> Goods tax levied at the moment of manufacture rather than sale

An excise, or excise tax, is any duty on manufactured goods that is normally levied at the moment of manufacture for internal consumption rather than at sale. It is therefore a fee that must be paid in order to consume certain products. Excises are often associated with customs duties, which are levied on pre-existing goods when they cross a designated border in a specific direction; customs are levied on goods that become taxable items at the border, while excise is levied on goods that came into existence inland.

Taxation of salt has occurred in India since the earliest times. However, this tax was greatly increased when the British East India Company began to establish its rule over provinces in India. In 1835, special taxes were imposed on Indian salt to facilitate its import. This paid huge dividends for the traders of the British East India Company. When the Crown took over the administration of India from the Company in 1858, the taxes were not replaced.

<span class="mw-page-title-main">Great Depression in India</span>

The Great Depression in India was a period of economic depression in the Indian subcontinent, then under British colonial rule. Beginning in 1929 in the United States, the Great Depression soon began to spread to countries around the globe. A global financial crisis, combined with protectionist policies adopted by the colonial government resulted in a rapid increase in the price of commodities in British India. During the period 1929–1937, exports and imports in India fell drastically, crippling seaborne international trade in the region; the Indian railway and agricultural sectors were the most affected by the depression. Discontent from farmers resulted in riots and rebellions against colonial rule, while increasing Indian nationalism led to the Salt Satyagraha of 1930, in which Mahatma Gandhi undertook marches to the sea in order to protest against the British salt tax.

<span class="mw-page-title-main">Economy of the Han dynasty</span> Economic aspects of the dysasty (206 BCE–220 CE)

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The Discourses on Salt and Iron was a debate held at the imperial court in 81 BCE on state policy during the Han dynasty in China. The previous emperor, Emperor Wu, had reversed the laissez-faire policies of his predecessors and imposed a wide variety of state interventions, such as creating monopolies on China's salt and iron enterprises, price stabilization schemes, and taxes on capital. These actions sparked a fierce debate as to the policies of the Emperor. After his death, during the reign of Emperor Zhao of Han, the regent Huo Guang called on all the scholars of the empire to come to the capital, Chang'an, to debate the government's economic policies.

<span class="mw-page-title-main">Inland Customs Line</span> 19th century British customs barrier in India

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<span class="mw-page-title-main">Salt in Chinese history</span> The role of salt, salt production, and salt taxes in Chinese history

Salt, salt production, and salt taxes played key roles in Chinese history, economic development, and relations between state and society. The lure of salt profits led to technological innovation and new ways to organize capital. Debate over government salt policies brought forth conflicting attitudes toward the nature of government, private wealth, the relation between the rich and the poor, while the administration of these salt policies was a practical test of a government's competence.

<span class="mw-page-title-main">Angelets</span> Catalan peasant rebels, 1667–1675

The Angelets, or “the Angelets of the Land”, were peasants who rose up in peasant revolts from 1667 to 1675 against the French authorities in Roussillon; the group of conflicts of the period is called the Revolt of the Angelets. The cause was the institution of the gabelle, a tax on salt, in 1661—a measure contrary to traditional constitutions of the earldom. The revolt first concerned the county of Vallespir, then it spread to those of Conflent and Roussillon.

Smuggling in pre-revolutionary France was a reaction to the economic hardships and internal Taxations throughout the country. Though the trade of contraband was lucrative throughout Europe, it was especially so in France and contributed to national tensions. While tobacco was commonly smuggled, common items such as salt and calico were carried across provincial borders to avoid high taxes. The smuggling trade was very profitable, and it allowed families to increase their income while subverting corrupt tax farmers. The prevalence of smuggling and the economic motivations surrounding the trade helped lead France towards revolution.

References

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