Physiocrats (ch. 3) pgs. 52-62
Adam Smith (ch. 4) pgs. 76-85
History Before the French Revolution, the public revenue was based
largely on taxes known as:
- the taille
– direct land tax imposed on French
peasant and
non-noble households, based on how much land they held.
- the taillon – a tax for military expenditure
- the vingtième (one-twentieth) – based solely on revenues (5%
of net earnings from land, property, commerce, industry and from official
offices)
- the gabelle
– a national salt tax
- the aides – national tariffs on various products (including wine and
tobacco),
- the douane – a local tariff on specialty products
- the octroi – a local tariff levied on products entering towns
- a local tariff levied on products sold at fairs
- the "dîme" – a mandatory
tithe to support
the church.
Tax farming before Colbert The Ferme générale developed at a
time when the monarchy suffered from chronic financial difficulties. The
Affermage (leasing,
outsourcing) of the collection of the traite (customs duties and
taxes) had the advantage of guaranteeing the Treasury foreseeable and regular
receipts, while reducing the perception of its role in tax-collection. The
rights were initially contracted separately to various tax farmers, who were
named traitants (who had the right to collect the traite) or
partisans (who had a share in the collection of the traite). They
were obliged to pay to the royal Treasury the sum stipulated in their lease, and
they received a share of the income and a share of any unexpected surplus. Each
right was leased separately, which caused great administrative complexity: the
taking of goods out of bond could involve several tax farms. Prior to 1598, this
system had developed so that the tax farms were allocated among five pays
(provinces).
In 1598,
Sully entrusted tax collection to one farm, instead of five and he subjected
the collection of duties raised in the provinces to the rights of the King. The
single tax farm was called the Cinq Grosses Fermes (five large farms). In
1607, he issued new rules (Règlement Général sur les traites) on the
collection of duties in an attempt to harmonize procedures. He also attempted to
constitute the whole of France into a single customs area and gather together,
but without success, the provinces considered foreign into the zone
covered by the Cinq Grosses Fermes. In the middle of the 17th century,
France was divided for tax purposes into three principal zones:
- the provinces of the Cinq Grosses Fermes,
- provinces considered foreign and therefore had negotiated lower rates
on some taxes, and
- provinces effectively following the example of the provinces considered
foreign, which formed free zones.
The farm under Colbert: traitants and partisans The
process was further developed under the aegis of
Jean-Baptiste Colbert Minister of Finance to
Louis XIV. To reduce the number of these farmers and to increase the share
of the collection transferred to the Treasury, Jean-baptiste Colbert sought to
gather a great number of rights together in fermes générales (general
farms). The first fermes générales was instituted in 1680 to collect
gabelles, aides, taille and douane .
Although sometimes of obscure origin, the financiers which took these rights
often quickly accumulated immense fortunes which enabled them to play a
significant political and social rôle. Their greed and excesses shocked public
opinion and were turned into objects of ridicule in literature, for example by
Alain-Rene Lesage in Turcaret, which was inspired by Paul Poisson de
Bourvallais.
The Ferme générale (1726-1790) In 1726, all the existing farms were
gathered in a single lease. The forty farmers general, who went guarantee of the
contractor of the lease, became powerful characters and fabulously rich persons.
Among the representatives of the first generation of these tax farmers were
Antoine Crozat (?) or the Pâris brothers.
Criticisms of the Ferme générale led the government in 1769 to
introduce a system of regulation, into which the collection of taxes and the
administration of the service to which the tax were entrusted to public
organisations, with managers receiving a fixed remuneration.
In 1780, at the initiative of Jacques Necker indirect taxes were distributed
between three tax farm companies: the Ferme générale (customs duties),
the Ligue générale (taxes on alcohol) and the Administration générale
des domaines et des droits domaniaux(land taxes and fees on land
registration).
At the end of the 18th century, the Ferme générale had become the
symbol of the inegalitarian society. The Ferme générale, with its
colossal fortune, appeared to encapsulate the perversion of the political and
social system. People blamed the injustices and the annoyances on the company,
which actually arose from the complexity of the tax system, the brutality of the
guards of the troops and the brutal repression of fraud and smuggling. The
gabelle was
the most unpopular of the taxes.
The Ferme générale was thus one of the institutions of
Ancien Régime which were most highly criticized during the
French Revolution and were depicted as birds of prey and tyrants. The
Ferme générale paid the price at the scaffold: 28 former members of the
company were
guillotined
on 8 May
1794, including the
chemist
Antoine Lavoisier. The Ferme générale was suppressed in 1790.
Organisation The lease of the Ferme générale was
concluded under 6-year contracts between the King and an individual who was a
figurehead got the company. The Ferme générale went guarantee for the
contractor. Their number of partners was fixed at 40, after having reached
nearly 90 earlier. The contractor committed himself to paying the Treasury the
amount of the lease and received in return any surplus. An upper limit was set
for this remuneration from 1780.
The Ferme générale had its headquarters in Paris. It employed in its
central offices nearly 700 people including two chaplains. Its local operations
included up to 42 provincial offices and nearly 25,000 agents distributed in two
branches of activity; that of the offices which checked, liquidated and charged
the fees; that of the brigades which sought and suppressed smuggling with very
severe punishments (such as hard labour or hanging).
The employees of the Ferme générale were not royal civils servants,
but they acted in the name of the king and therefore benefitted from particular
privileges and the protection of the law. The guards of the service of the
brigades moreover had the right to bear weapons.
The direction of the company was insured collectively by the Ferme
générale. They met as committees of experts and had control of the external
services.
The day before the
French Revolution, almost all the rights of drafts and rights indirect (gabelle,
tax on tobacco and a number of local taxes) were awarded.
The income from the Ferme générale represented more than half of the
public revenue.
The company built the
Wall of the Farmers-General between 1784 and 1791 to ensure the payment of
taxes to the Ferme générale on goods entering Paris.
