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Within the Roman Empire, these private individuals and groups that collected taxes in lieu of the bid they had paid to the state were known as '' Publicani '', of whom the best known is probably St. Matthew , a ''publicanus'' in the village of Capernaum in the province of Judaea . The system was widely abused, and reforms were enacted by Augustus and Diocletian . ''Roman-taxes'' at unrv.com Tax farming is ''not'' identical with Privatised Tax Collection , where private individuals or groups collected taxes and give them to the state in return for a fee. Tax farming is Speculative , meaning that the private individual or group must invest their own money initially to pay off the tax debt, against the hope of collecting a larger sum subsequently (hence "farming"). HISTORY Besides the Romans, historical examples include the tax collection methods of the . PROS AND CONS OF TAX FARMING Tax farming was historically an important step in the development of State Revenues And Economic Growth by providing a method for collecting taxes across a large area without the need for a tax-collecting Bureaucracy (or during periods when such a bureaucracy is unworkable or impossible to maintain). As such, systems of tax collection more or less similar to Roman tax farming were used in Pharaonic Egypt , various medieval Western European countries, the Ottoman and Mughal Empire s, and in Qing Dynasty China. On the other hand, as states become stronger, buoyed up by revenues brought in by tax farming, tax farming was discarded in favour of centralised tax collection systems. In part this was because tax farming systems tended to rely on wealthy individuals outside the state machinery, Gang s, and Secret Societies .John Butcher and Howard Dick, ''The Rise and Fall of Revenue Farming: Business Elites and the Emergence of the Modern State''. St. Martin's Press, 1993 The key flaw in the tax farming system is the tension between the state, which wants a long-term source of taxation revenue, and the tax farmers, interested in making a profit on their investment in as short a time as possible. As a result tax-farmers often abuse the taxpayers in various ways, such as deliberately undervaluing goods paid to them in lieu of taxes, which allows the the tax-farmers to re-sell those goods at maximum profit. However, such abuses stifle economic growth, limiting the quantity of taxes generated over the long-term. SEE ALSO REFERENCES EXTERNAL LINKS |
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