As early modern European states expanded and claimed sovereign rights over non-European territories, they were confronted with the need to levy taxes on newly acquired resources, which in some cases were already taxed by a preexisting tax system. To varying degrees, the levying of taxes played an important role in ... (Show more)
As early modern European states expanded and claimed sovereign rights over non-European territories, they were confronted with the need to levy taxes on newly acquired resources, which in some cases were already taxed by a preexisting tax system. To varying degrees, the levying of taxes played an important role in the financing of the empire and justified the transfer of European tax institutions and tax administration practices, which were moulded with non-European traditions into as coherent a whole as possible. While the tax systems of territories under European sovereignty differed greatly in structure (i.e., in terms of tax categories), tax administration was perhaps less diverse, largely due to the prevalence of decentralized tax collection and the frequent use of tax farming, as a means of overcoming structural constraints (distance and poor communications). Contractual tax collection arrangements in early modern European empires, which were also common in Europe for similar reasons, created the conditions for an alignment of interests between state finances and the private sector, allowing financiers (nationals and foreigners) and local elites to share in tax revenues. Depending on a number of variables, however, tax farming took different forms in early modern empires, affecting the level of profit that the tax farmer could earn from this activity.
Drawing on the ‘New Fiscal History’, this paper aims to address some of the conceptual challenges in examining the types of alliances that could be forged between the state and the private sector in the exploitation of colonial resources. First, it highlights that these alliances went beyond the farming out of the collection of direct and indirect taxes, as the state also placed non-fiscal revenues in the market. This was the case of monopolistic rents, such as the extraction of mineral or natural resources or the distribution of colonial goods. Although monopolistic rents such as those claimed over the extraction of Brazilian diamonds, the distribution of colonial goods (pepper, brazilwood), or the introduction of enslaved people in the Spanish American markets, were not taxes, they constituted a type of state revenue whose exploitation was routinely handed over to the private sector through short-term contracts. Second, it considers that different types of taxes and rents produced different contractual arrangements. Direct and indirect taxes posed different challenges, as did the exploitation of monopolistic rents, leading to significant differences, for example, in the type of private actors involved, the duration of the contracts, or even in the forms of awarding the contracts. Examples from the Spanish, Portuguese, and Dutch empires in the New World and Asia will be used to illustrate these conceptual challenges and suggest possible ways to address them. (Show less)