145:, to keep all the revenue he could extract from the holding in exchange for fixed rents. Thus the rights to the revenue stream produced by the land had been farmed by the lessor. Because this was the form of the farming transaction most known to popular society, the word "farmer" became synonymous with a tenant of an agricultural holding.
756:, Paris, 1993 "Ferme: contrat par lequel un proprietaire abandonne a un locataire l'exploitation d'un domaine moyennant le paiement d'un loyer" (contract by which a proprietor transfers the exploitation of a holding to a tenant by means of the payment of a rent); Cassell's Latin Dictionary, ed. Marchant & Charles
596:
The key flaw in the tax farming system is the tension between the state, which seeks a long-term source of taxation revenue, and the tax farmers, who seek to make a profit on their investment in as short a time as possible. As a result, tax-farmers often abuse the taxpayers in various ways, tending
260:
To determine the maximum rent they are willing to pay, the tenant estimates the long-term average yearly gross value of the revenue stream, based on past records and accounts, adjusting for any new circumstances affecting the future. They then deduct a risk element and a discount for the time value
690:
tax, that is to say of variable yield. The NBR took this step because under the self-clearance system monitoring of production and sales of cigarettes proved to be difficult. It was agreed that if the cigarette producing firms paid the minimum revenue fixed by the NBR, physical monitoring would be
296:
was reassigned by the Roman State to private individuals or groups. 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 saleable goods from the people within that area. The system
264:
The risk is related to the possibility of some debts forming the revenue stream being defaulted on or paid late, leading to variability in the revenue. The resulting figure becomes the maximum rent the tenant offers to the farm's lessor. The tenant's profit is the excess of revenues extracted from
268:
The tenant's skills lie in negotiating a favorable rent by overstating the riskiness of the cash flow stream and effectively managing the assigned debts as a skilled debt-collector and manager. They must ensure their ability to enforce debt payments, including resorting to legal action and paying
651:, meaning that the tenant of the farm bears the full risk of defaulted debts. In addition, a tenant is often required as a term of the lease to make an early rent payment, which must be financed from his own resources until the revenue stream subject to the farm has started to be collected.
671:
from July 2010. However, debt collection agencies, like invoice factors, are not truly farmers of revenue streams, as they do not bear any risk of default. Rather they make loans in expectation of future receipts, such loans being always recoverable and secured on the income stream itself.
256:
The tenant of a farm can only make a profit after carefully assessing its value. While modern financial management theory employs scientific formulae for such calculations, astute financiers of the past would have understood them well, whether done mentally or by making marks in the sand.
579:
China. As states become stronger, buoyed up by revenues brought in by tax farming, the practice was discontinued 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,
237:. The word continued the same senses of "rent, farmed office, source of revenue, feast". The meaning "rent, fixed payment", which was already present in the Old English word, was further strengthened due to the word's resemblance to the unrelated (so say these sources)
67:) lease or assign the right to collect and retain the whole of the tax revenue to a private financier (the farmer), who is charged with paying fixed sums (sometimes called "rents", but with a different meaning from the common modern term) into the
535:
system, similar rights were often purchased from the crown. 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
122:, meaning "firm, strong, stout, steadfast, immoveable, sure, to be relied upon". The modern agricultural sense of the word stems from the same origin, in that a medieval land-"holder" (none "owned" land but the king himself under his
605:, reselling the goods to create a second profit source. Such abuses stifle economic growth by restricting the ability of the tradesman to reinvest in his business, limiting the quantity of taxes generated over the long-term.
848:
Douglas, David C. & Greenaway, George W., (eds.), English
Historical Documents 1042â1189, London, 1959. Part II, Government & Administration, part C, The Sheriff & Local Government, p. 433
626:
After the 2008 financial crisis, the city of
Chicago needed money and a deal was made to sell all 36,000 of the parking meter spots in the city for 75 years for 1.15 billion dollars to a firm called
647:, where private individuals or companies collect taxes and pass them to the state in return for a commission or fee, without bearing any risk consequent of default by the taxpayer. Tax farming is
942:
951:
859:
141:), that is to say as a unit producing a revenue stream, together with its workers and livestock, for exploitation by a tenant who was licensed by the contract, or
309:. Within the Roman Empire, these private individuals and groups which collected taxes in lieu of the bid (i.e. rent) they had paid to the state were known as
691:
withdrawn. The NBR resorted to this technique of financial management to avoid the large costs of monitoring while gaining more in revenue with certainty.
618:
In
Bangladesh and India tolls on bridges and roads and dues from public properties such as lakes and forests are often leased to private persons or firms.
171:("provision, stores of food, supplies, possessions; provisions supplied to the king or a lord by a tenant or vassal; rent, feast, benefit, assylum"), from
540:, theoretical time limits on the grant. In many cases, including those mentioned, tax rights were not transferable or divisible, unlike feudal fiefdoms.
269:
standard fees for bringing a lawsuit under the government authority that is the farm's lessor. The tenant acts as a principal, not the lessor's agent.
563:, or during periods when such a bureaucracy is unworkable or impossible to maintain. Systems of tax farming similar to the Roman model were used in
406:
which I order them to pay to my sheriff at
Huntingdon. And I forbid any of my officers to do them injury or insult in respect of this.
59:
to a third party and the holder of the revenue stream receives fixed periodic rents from the contractor. It is most commonly used in
837:
How the Irish saved civilization: the untold story of
Ireland's heroic role from the fall of Rome to the rise of medieval Europe.
940:
888:
531:, these rights were granted by an authority, in this example the caliph, for services rendered or promised. In the Byzantine
17:
949:
680:
In 1999 the
National Board of Revenue in Bangladesh (NBR) negotiated with cigarette producing firms a minimum amount of
801:
343:
446:
597:
them to switch their economic activity from strategic long-term projects to short-term revenue generation. In
1030:
547:, the tax farmer was a government employee, paid a salary, and all money collected went to the government.
371:
180:
203:("life, spirit"). The Old English word is stated by these sources as having unusually been borrowed by
734:
729:
644:
559:
by providing a method for collecting taxes across a large area without the need for a tax-collecting
496:
458:
1040:
316:
164:("farm, rent, revenue; revenue collected from a farmer; factor, stewardship, meal, feast"), from
993:, California Series on Social Choice and Political Economy (13), University of California Press.
668:
627:
395:
387:
367:
31:
37:"Tax farmer" redirects here. For the notorious tax farmers of pre-revolutionary France, see
1035:
1025:
929:
The Rise and Fall of
Revenue Farming: Business Elites and the Emergence of the Modern State
556:
466:
424:
52:
8:
796:
Howatson M. C.: Oxford
Companion to Classical Literature, Oxford University Press, 1989,
544:
508:
319:
38:
475:) developed their own landowning class. It was officially terminated in 1856 during the
359:
127:
110:, meaning "a fixed agreement, contract", ultimately from the classical Latin adjective
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Besides the Romans, historical examples include the tax collection methods of the
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the farm, less the rents, administration, levying, and collection expenses.
187:("life, strength, force"). It is related to other Old English words such as
705:
576:
469:; however this changed by the 18th century and holders of grants-for-life (
289:
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602:
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465:) is a non-heritable tax-farming system and was established under Sultan
416:
165:
75:
968:
NBR's attempt at Tax
Farming - fixed amount of VAT on Cigarettes in 1999
471:
301:
in 123 BC primarily to increase the efficiency of tax collection within
428:
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and monks of
Thorney to be held in fee-farm for an annual rent of 100
327:
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998:
Tax Farming: A Radical Solution for Developing Country Tax Problems?
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in which the management of a variable revenue stream is assigned by
476:
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283:
123:
68:
56:
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342:. Tax farming practices are believed to have contributed to the
331:
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was accused of tax farming, which led to his excommunication by
715:
598:
984:
NBR's attempt at Tax Farming â fixed VAT on Cigarettes in 1999
720:
710:
523:) prior to the twentieth century. In many cases, such as the
520:
420:
399:
64:
334:. The system was widely abused, and reforms were enacted by
684:(VAT) that should be paid per month even though VAT is an
664:
581:
528:
363:
355:
302:
138:
785:
Medieval Latin: an introduction and bibliographical guide
130:
might let it (i.e. lease it out) under a contract as a
883:. England, UK: Faber and Faber Limited. p. 234.
229:"farm". This is refuted by those sources which state
555:
Tax farming was an important step in the history of
567:, various medieval Western European countries, the
98:Some sources derive "farm" with its French version
354:Medieval English kings frequently made grants "in
93:
1017:
663:, some tax collection of "lower value debts" by
1000:(September 1992). IMF Working Paper No. 92/70.
148:
812:Balsdon J.: Roman Civilization, Pelican, 1965
752:Larousse Dictionnaire de la Langue Francaise
74:Farming in this sense has nothing to do with
638:
305:itself but the system quickly spread to the
621:
774:Century Dictionary and Cyclopedia, "farm".
643:Tax farming is not synonymous with modern
102:, most notably used in the context of the
864:Encyclopedia of Jews in the Islamic World
601:systems, tax farmers commonly undervalue
394:, greeting. Know that I have granted the
382:William, king of the English, to all the
876:
613:
179:("means of living, subsistence"), from
14:
1018:
857:
251:
78:, other than in a metaphorical sense.
839:Anchor Books, Doubleday, 1996, p. 26.
675:
153:According to other sources, the word
970:, 2007 : Desh Prokashon, Dhaka.
462:
723:: the system of tax farming in the
86:There are two possible origins for
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315:, of whom the best known is the
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27:Technique of financial management
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344:fall of the Western Roman Empire
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934:
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505:French State prior to Louis XVI
292:practice whereby the burden of
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233:to derive from classical Latin
199:("to provision, sustain"), and
94:Derivation from classical Latin
927:John Butcher and Howard Dick,
860:"Sar Shalom ben Moses ha-Levi"
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447:Taxation in the Ottoman Empire
362:. An example is the following
13:
1:
880:A History of the Arab Peoples
858:Rustow, Marina (2010-10-01).
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543:Sometimes, as in the case of
482:
288:Tax farming was originally a
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106:, from the mediaeval Latin
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374:to be held in fee-farm by
149:Derivation from Old English
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931:. St. Martin's Press, 1993
735:Public-private partnership
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982:Chowdhury, F. L. (2007),
730:Privatized tax collection
645:privatized tax collection
639:Privatized tax collection
215:and to have provided the
63:, where governments (the
986:, Desh Prokashon, Dhaka.
877:Hourani, Albert (1991).
669:debt collection agencies
622:United States of America
248:("security, firmness").
909:Encyclopedia Britannica
667:has been outsourced to
370:(1087â1100) granting a
905:"IltizÄm | tax system"
628:Chicago Parking Meters
515:prior to 1862 and the
408:
396:Hundred of Normancross
195:("purveyor, grocer"),
966:Chowdhury, Faizul L.
380:
244:("firm, solid"), and
32:Farm (disambiguation)
989:Levi, M. Of (1988),
614:Indian sub-continent
557:economic development
425:Sar Shalom ben Moses
53:financial management
30:For other uses, see
18:Tax farming (France)
1031:History of taxation
996:Stella, P. (1992),
545:Miguel de Cervantes
346:in Western Europe.
330:in the province of
320:Matthew the Apostle
252:Valuation of a farm
181:Proto-Indo-European
51:is a technique of
954:2010-07-31 at the
945:2011-05-14 at the
676:Simple commutation
358:-farm", a form of
326:in the village of
128:feudal land tenure
890:978-0-674-39565-7
765:Larousse, op.cit.
725:Dutch East Indies
517:Dutch East Indies
317:disciple of Jesus
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1011:Roman Taxes
825:at unrv.com
823:Roman-taxes
649:speculative
561:bureaucracy
417:Chief Rabbi
169:feorm, farm
166:Old English
157:comes from
76:agriculture
49:tax-farming
1020:Categories
914:2021-09-23
741:References
687:ad valorem
609:Modern-day
551:Advantages
483:Other uses
445:See also:
429:Maimonides
368:William II
340:Diocletian
324:publicanus
261:of money.
217:Old French
191:("farm"),
134:(not as a
655:Factoring
489:Ptolemies
479:reforms.
467:Mehmet II
404:shillings
328:Capernaum
312:publicani
307:Provinces
189:feormehÄm
82:Etymology
952:Archived
943:Archived
695:See also
501:Ottomans
477:Tanzimat
472:malikĂąne
384:sheriffs
366:of King
336:Augustus
284:Publican
246:firmitas
222:"farm",
197:feormian
193:feormere
124:allodial
69:treasury
659:In the
569:Ottoman
538:pronoia
533:pronoia
525:Abbasid
511:), and
497:Mamluks
493:Seljuks
454:iltizam
441:Iltizam
398:to the
332:Galilee
224:Occitan
65:lessors
45:Farming
887:
800:
787:, 11.3
716:Octroi
599:barter
584:, and
573:Mughal
513:Russia
503:, the
463:ۧÙŰȘŰČۧÙ
388:barons
242:firmus
235:firmus
185:perku-
120:firmum
112:firmus
754:Lexis
721:Pacht
711:Maona
582:gangs
521:pacht
519:(see
507:(see
421:Egypt
400:abbot
290:Roman
239:Latin
231:firma
227:ferma
220:ferme
213:ferma
209:firma
201:feorh
162:ferme
143:firma
116:firma
108:firma
100:ferme
885:ISBN
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571:and
529:Iqta
451:The
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364:writ
338:and
322:, a
303:Rome
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