Taxation in premodern China varied greatly over time. The most important source of state revenue was the tax on agriculture, or land tax. During some dynasties, the government also imposed monopolies that became important sources of revenue. The monopoly on salt was especially lucrative and stable. Commercial taxes were generally quite low, except in times of war. Other means of state revenues were inflation, forced labor (the corvee), and the expropriation of rich merchants and landowners. Below is a chart of the sources of state revenue in Imperial China.

Summary of premodern taxes by dynasty

History

Business taxes were first levied in China during the Zhou dynasty (1046-256 BCE). Guan Zhong (723-645 BCE) wrote that because taxation would reduce the people's wealth and make them dislike the government, it was better to obtain revenue by monopolizing the sale of salt, iron, forest products, and ore. Confucian thinking generally held that taxation should be low. Chinese historiography often attributes the collapse of dynasties to the imposition of heavy taxes and levies. Mencius (372-289 BCE) favored low taxation of the people and stated that the rulers of the warring states were imposing taxes like brigands. His view was that the agricultural tax in place but abolish all other taxes. He particularly criticized market taxes, head taxes, and housing taxes. Mencius believed the ideal tax rate was 10%. After defeating the other six kingdoms, the Qin dynasty maintained the high taxes it had imposed in war time and imposed taxes to fund projects including the Great Wall and the Terracotta Army. Taxes and levies equaled two-thirds of farmers' crops. Discontent with these policies contributed to rebellion and ultimately the defeat of the Qin and establishment of the Han dynasty. During the Han dynasty, Emperor Wu (156-87 BCE) collected min qian (a form of business tax) from merchants, businessmen, and handicraftsmen. The Tang dynasty (618-907 CE) imposed yashui (a form of business tax) on intermediary agents. In 9 CE, Emperor Wang Mang of the Xin dynasty (9 to 23 CE) established the first income tax through a 10% tax of net earnings from wild herb and fruit collection, fishing, shepherding, and various nonagricultural activities and forms of trading. People were obligated to report their taxes to the government and officials would audit these reports. The penalty for evading this tax was one year of hard labor and confiscation of the entirety of a person's property. Because it caused popular discontent, this income tax was abolished in 22 CE. Yashui was also an important source of local government revenue during the Qing dynasty (1644-1911).

Citations

General sources