7.3.2 Taxes

Collecting taxes was a chief concern of the Roman government because tax revenues were a necessity for conducting business and funding public programs. Taxes fell into several categories, including those calculated with census lists in the provinces, import and customs taxes, and taxes levied on particular groups and communities.

Upper-class investment in the provinces drove the economy and facilitated the collection of taxes. An important role in this system was played by the publicani, who operated as tax collectors in the provinces. These contractors first bid for the right to collect taxes by making a direct payment to the Roman government, which functioned as a de facto loan. To recover their investment, the publicani then collected taxes from provincial residents, keeping any money in excess of their original bid in addition to a percentage paid by the Roman government.

The publicani ran an effective system of tax collection, but it was imprecise and they were often accused of fraud. During the reign of Augustus, the publicani system was essentially abolished. In the revised system, provincials had to pay roughly 1 percent tax on their wealth, which included their assets in the form of land, as well as a flat poll tax. This new tax structure was assessed through census lists and administered by procurators, imperial officials who made collections and oversaw the payment of public officials in the province.

Other taxes included those on inheritances and legacies. To raise funds for paying veteran soldiers, in 6 CE, Augustus codified a new 5 percent tax on money inherited through a will. The rule excluded inheritances from close relatives, however, and was directly aimed at traditional patron-client relationships. With this tax, Augustus disrupted elite patron-client networks that had relied on the formation of social bonds outside the immediate family. As a result, the elite were compelled to coalesce around the figure of the emperor as the ultimate patron.

Despite these attempts at collecting taxes, by the third century CE the empire had entered a period of financial crisis. Constant wars meant a never-ending need to sustain large armies. As less new land was acquired, troop payments came more often from the central treasury than from newly conquered territory. The financial pressure proved critical. The emperor Diocletian implemented a series of measures to address the problems. For example, in 301, to combat inflation, Diocletian issued the Edict on Maximum Prices, which set a price ceiling for certain goods and services. Diocletian’s reforms also increased the money collected by the government with two new taxes, on agricultural land and on individuals. The inclusion of property in Italy in the land tax for the first time, as well as Diocletian’s standardization of a five-year census, dramatically increased revenue for the empire. Replacing some of Rome’s revenue shortfall through these taxes helped stabilize the economy in the short term.