The History of Taxation: Medieval Spain

BASIC CONCEPTS

Alcabala, jizya, tercias reales, cortes, numerarii, pecheros, tributum, kharaj.?

TAXES IN ANCIENT TIMES

There is very little information about the history of taxation in the Iberian Peninsula before its conquest by Rome. One of the first references dates back to the 5th–4th centuries BCE, when the Carthaginians came there, took land from some local people, and imposed high taxes on the rest of the population.

The Romans defeated the Carthaginians at the end of the 3rd century BCE and introduced taxes in Hispania (the Roman name for the Iberian Peninsula). However, the peoples who inhabited Hispania waged bloody wars for another two hundred years, resisting the Romans. Nevertheless, by the beginning of the Common Era, Hispania became the second most important center of the Roman Empire after Italy. Like other provinces, Hispania was subject to many local and imperial taxes. Along with the income from silver mines, imperial taxes brought a significant contribution to Rome's treasury.

TAXES UNDER THE VISIGOTHS

In the 5th century, Hispania was conquered by the Visigoths, who ruled it for the next three hundred years.

The Visigoths partially preserved the complex Roman cadaster-based system of calculating land tax, which made up the bulk of treasury receipts. However, the apparatus of the Visigothic state was less developed than that of the Romans and could not keep the land cadaster up to date, which eventually led to distorted calculations.

The Visigoths also preserved the tributum, customs duties, and other taxes, including a trade tax paid by everyone, even by the clergy and military.

Villagers paid taxes in kind but could also pay with money at an above-market rate for the products. City dwellers could pay only with money.

Initially, the conquerors did not pay taxes as it was believed that they should serve the state only as soldiers. Over time, they settled down also became taxpayers.

Taxes were collected first by city authorities, dukes, and counts, and then by royal officials known as numerarii (from the Latin "nummum aerariis," meaning great wealth). To facilitate tax collection, the country was divided into tax districts. Several tax collectors worked in each district to prevent tyranny and corruption. Bishops supervised the collection of taxes. It was a capital offense to charge taxpayers over the set amount.

After King Reccared I (559-601) converted to Catholicism in 587, he and subsequent rulers began to zealously fight for the establishment of a single religion in Spain. Jews had a particularly hard time. Among other things, tax measures were used to convert them to Christianity. Jews who had not converted to Christianity were charged an additional poll tax, which the community had to pay. The total amount of tax from the community did not change when some of its members converted to Christianity, but was redistributed to the rest of the Jews.

At the end of the 7th century, agriculture began to decline, peasants went bankrupt, and tax revenues decreased. The treasury was emptied, which, amid constant internal political conspiracies and intrigues, hastened the fall of the Visigothic Kingdom.

TAXES IN THE CALIPHATE

In 711, the Arabs and the Berbers (also known as the Moors) took advantage of the turmoil in the Visigothic Kingdom and made another raid from Africa through the Strait of Gibraltar to the southern part of the Iberian Peninsula. They conquered almost all of Hispania in a short time, except for the northern mountainous regions. The conquered lands became part of the Islamic Caliphate.

The caliphate's traditional taxes were extended to the subjugated territory. Muslims paid zakat, while non-Muslims paid jizya and kharaj. Jizya was set in accordance with a property census. Kharaj was paid by everyone, including priests, as well as Muslims, but only from lands previously owned by non-Muslims. The kharaj rate was from 5% to 20% of income. All those who renounced Christian or Jewish beliefs and adopted Islam were exempt from jizya, and slaves who converted to Islam were freed.

The conquerors primarily confiscated state and church lands and detained landowners who tried to flee as well as those who resisted. A fifth of these lands formed a public fund called khums. It was transferred for cultivation to serfs who were obliged to give 1/3 of the harvest. The rest of the confiscated lands were distributed among the warriors, who had to pay kharaj. The lands kept by the previous owners were taxed at rates from 1/3 to 1/2 of the harvest. Artisans, cattle breeders, and merchants also paid increased taxes (all trade transactions were taxed based on the value of the goods).

The heavy tax burden made many Hispanic people convert to Islam. The conquerors, on the contrary, did not seek to force non-Muslims to Islam, since this deprived them of additional income.

After the collapse of the Umayyad Caliphate in 750, its Hispanic part was declared the Emirate of Córdoba, which in 1031 was divided into many territories, or taifas.

RECONQUISTA

The Visigoths, who lived in northern Hispania in the mountains of Asturias, did not accept Arab rule and organized a movement to reclaim the country for Christians. This movement was called Reconquista, i.e. "reconquest," and existed for almost 800 years (until the end of the 15th century).

Christians gradually recovered territories subjugated by Muslims. As a result, several Christian kingdoms emerged on the peninsula: Aragon, Barcelona, Castile, Leon, and Navarre.

LAWS AND TAXPAYERS

The rights and obligations, including the payment of taxes, as well as various grants and privileges of residents of cities and rural communities, were recorded in fueros, national and local codes of laws. They were passed by corteses, parliaments consisting of nobles and clergymen.

The nobility was exempt from taxes. Their only duty was to help the king during war. Se?ores (feudal lords) and their dependents had to participate in hostilities personally, but the expenses were covered with the royal treasury funds.

The rest of the free population consisted of plebeyos (plebeians). But not all plebeyos had to pay taxes. Only the pecheros, the taxable class, were obliged to pay taxes.

Taxes were paid in favor of landowners: to the king in the royal domain, to bishops and abbots from church lands, or to the se?ores. The slaves, serfs, and other dependent inhabitants of these lands were obliged to pay quitrent and perform corvée work in addition to the primary tax.

Parias, a poll tax similar to jizya but for non-Christians, was introduced. Extraordinary taxes were levied on non-Christians more often than on Christians.

TAXES IN THE KINGDOMS

Taxation differed between the kingdoms.

In Aragon, taxes were low, which contributed to the development of trade, income growth, and expansion of the kingdom's territory. The major tax was a poll tax paid by all the subjects of the king, regardless of religion.

In Castile, on the contrary, taxes were constantly rising. The authorities imposed alcabala, a 5% tax on trade transactions, which first was collected in favor of city councils but later became the first nationwide tax.

Allegedly to fight against the Moors, the king of Castile took the tercias reales (royal thirds)—2/9 of church tithes. In the 13th century, the authorities introduced the moneda forera (Spanish, lit. "foreign coin"), a payment to the king in exchange for his obligation not to spoil the coins during minting, that is, not to reduce their precious metal content. This payment turned into a tax levied on everyone who owned property of at least 120 maravedis. It was charged in the first and last year of the seven-year cycle. Later, nobles and priests, as well as some cities and territories, were exempted from it. As a result, revenues from this tax became insignificant, and a treasury reform abolished it in 1724.

LOCAL TAXES

The status of rural and urban residents was determined by local fueros and differed significantly between regions, even in the same kingdom. Local taxes covered almost everything: births, relocations, royal visits, births or marriages of princes, house sales (1/10 of the cost), firewood collected in the forests, pastures, transportation and use of bridges and roads, refusal of military service, construction and farming. Maritime tithes and duties for loading and unloading cargo were paid at ports.

In 1357, Barcelona had 16 taxes, including taxes on salted fish, olive oil, wax, and glass.

Additionally, there was the patronato, a form of self-taxation, whereby small property owners sought patronage from powerful magnates. In return, they paid tribute to their se?ores or rendered them services. The patronato was used not only by individuals and families, but even by towns and villages. Protected people could change their se?ores if they did not receive proper protection.

In the 13th century, some kingdoms began to replace multiple taxes with one annual tax of 10% of the value of movable and immovable property. For this purpose, they compiled property censuses and land cadasters.

UNIFICATION OF SPAIN

In 1469, the contradictions between the two main Christian kingdoms of Aragon and Castile were resolved by the dynastic marriage of Ferdinand of Aragon (1452–1516) and Isabella?I of Castile (1451–1504). This event marked the beginning of the Spanish unification process, although it took several more decades to reach the final political unification.

In 1476, Isabella established Europe's first police force maintained with taxes to protect settlements and roads.

TAX REFORM

Despite financial problems, Ferdinand and Isabella abolished all new and extraordinary taxes adopted by the king of Castile, who ruled before them. Individuals and corporations were prohibited from "asking, demanding, charging or imposing new entry fees, both gate and castle fees."

Queen Isabella sought to restrict the rights of se?ores, which they had received from previous rulers, and enacted a proposal to check all their benefits and grants, including land holdings. The se?ores had to provide documents that substantiated their rights. As a result, the royal treasury received an additional 30 million maravedis.

In 1478, to fight for the purity of the faith, the rulers established an ecclesiastical court, the Inquisition, which ultimately killed, burned, or expelled about three million people. Most of the punished were wealthy and educated people who had been the country's economic and cultural foundation for years and had paid a significant portion of taxes.

All owners of property located in the royal domain were required to pay taxes regardless of their residence. The customs duty receipts were systematized. In addition, tax benefits were regulated. They were granted to the most disadvantaged, but not to the rich, as had been the case previously. Thanks to this policy, the rulers of united Spain enjoyed popular support.

SALES TAX

The collection of sales tax was described in detail in Cuaderno de alcabalas (Logbook of Alcabala). The tax was increased to 10%. But this was the hypothetical maximum, since there were many benefits and exemptions. The king exempted clerics, palace officials, monasteries, entire cities, and individuals from this tax. The alcabala was not imposed on some transactions, such as the donation and exchange of books, and the sale of mules and poultry. All these benefits significantly complicated tax collection and reduced revenues from the alcabala.

In practice, the total amount of the alcabala was distributed among the cities and farmed out. To collect the required funds, the local corteses increased the trade tax by 2%–3% for some types of goods.

Reforms did not solve the state's financial problems with significantly increased expenses. To replenish the treasury, based on the Bull of the Crusade, Isabella and Ferdinand repeatedly agreed with the Pope to collect revenues from the sale of indulgences, which were intended to fight infidels. As a result, although the Vatican granted the rights temporarily, these extraordinary fees became permanent.

In 1492, the Emirate of Granada, the last Muslim state in the territory of Spain, capitulated. It had paid almost 100 kg of gold to the treasury of Castile annually. The long-term war with the Arab conquerors ended. However, Spain now had to maintain a region that had previously paid tribute.

DISCOVERY OF AMERICA

Also in 1492, Spain enjoyed an incredible economic and political success thanks to the discovery of America by Christopher Columbus (1451–1506). Columbus had been hatching travel plans for a long time and repeatedly appealed to various European monarchs for help in organizing a voyage to India.

After two refusals, Queen Isabella decided to support Columbus. She allowed him to collect money for equipment against others' unpaid taxes. In fact, Columbus became a tax farmer in Castile. He also could collect fines from the city of Palos de la Frontera for violating the rules of trade with the Moors in Africa.

Columbus had to cover 1/8 of the expedition costs at his own expense. This money was provided to him by M.A.?Pinzón, a Spanish shipowner and navigator from Palos de la Frontera, who became a close associate and, at the end of the first expedition, a rival of Columbus.

Instead of India, Columbus discovered a continent incredibly rich with precious metals. The amount of exported gold and silver is unknown. The conquerors of the New World underestimated the figures, partially because precious metals imported to Spain were taxed at 20%.

According to some estimates, over 180,000 tons of silver and about 3,000 tons of gold were exported from America.

PRICE REVOLUTION

The wealth that came from Mexico and Peru suddenly became an economic disaster for Spain and other European countries. The huge influx of gold and silver decreased the value of these precious metals in Europe and increased the money supply, pushing commodity prices up. By the beginning of the 17th century, prices grew by 2–2.5 times in Italy and France, 4 times in England, and 4–4.5 times in Spain and Portugal as compared to the previous century.

Goods from Spain and Portugal became so expensive that people preferred cheaper products from other countries. Along with prices, production costs increased too. As a result, local products were not in demand. The imported wealth did not help grow the Spanish economy. It went to other countries, mainly to England and the Netherlands, which offered cheaper products.

MILITARY POLICY

The vast wealth gained during the colonization of the New World was spent on the wars waged by Spain in Europe, Africa, and North and South America.

Spanish Empire in the 16th century.

For Spaniards, the main and most profitable occupation was military service, which most residents aspired to. Farming and handicrafts became unprofitable, partially due to high and unpredictable taxes. The country's economy fell into decline. Merchants, mainly Moriscos and Marranos, i.e. Moors and Jews who had newly converted to Christianity, were oppressed and expelled from the country, while their property and capital were confiscated to replenish the military budget.

NATIONAL DEBT

In the middle of the 16th century, Philip II (1527–1598) became king of Spain and all its territories. In addition to the royal title, he received a huge public debt of roughly 20 million ducats.

The authorities dealt with the lack of funding, primarily for the maintenance of the army and navy, by increasing taxes on trade in Castile. There were no other internal sources of income: the clergy and nobles were officially exempt from taxes, and farming and handicraft activities were unpopular and unprofitable. The taxes from other Spanish possessions in Europe went mainly to local budgets.

With the alcabala raised to 14%, tax revenues increased by 60%. But the national debt grew at an even higher rate. To cover it, Philip II actively used internal and external loans. Eventually, loan payments became equal to tax revenues. Under Philip II, the treasury was on the verge of bankruptcy three times in its relations with the banks of the Netherlands, Genoa, and Germany. However, this did not stop the bankers from issuing new loans backed by the gold and silver coming in from America.

To replenish the treasury, the king increased taxes in the Netherlands: the alcabala from 5% to 10%, the tax on the sale of land up to 5%. He also introduced a 1% levy on all movable and immovable property. This dealt a blow to local industry and trade and sparked a revolution. As a result, seven northern provinces gained independence, and the Spanish treasury lost another source of income.

Philip II tried to solve financial problems by defeating England, whose ships robbed Spanish merchant ships. Meanwhile, Queen Elizabeth supported the resistance in the Netherlands. In 1588, Philip II sent the Invincible Armada of 130 warships, but the campaign ended in defeat. He failed to fill the treasury.

DECLINE OF THE SPANISH CROWN

Philip III (1578–1621) inherited from his father a country with a debt of more than 140 million ducats. The total taxes collected from the entire empire were only 27.5 million ducats per year.

In 1609, the king used a "proven" method to replenish the treasury. Under the pretext of "fighting for the purity of blood," he confiscated the property of the Moriscos. About 300,000 residents, mostly wealthy people, were expelled from the country. But the treasury suffered losses again due to a reduction in tax revenues.

Attempts by Philip IV (1605–1665) to raise taxes caused an uprising in Catalonia, to which he was forced to give autonomy, and a palace coup in Portugal, which eventually gained independence.

The last Spanish king Charles II (1661–1700) received a ruined country. Despite the high tax rates, tax revenues were insufficient even to maintain the royal court. Due to the lack of money, people in the provinces returned to bartering.

Charles II left no heirs. France won the War of the Spanish Succession and enthroned the French king's grandson. Thus, for Spain, the Middle Ages ended with the start of a long-term period of dependence on France.

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