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liangshuifa 兩稅法, the Twice-Taxation System

Jan 22, 2016 © Ulrich Theobald

Liangshuifa 兩稅法, the twice-taxation system, was introduced in the late eighth century by the Tang dynasty 唐 (618-907) and remained valid until the late Ming period 明 (1368-1644), when the single-whip method (yitiaobian fa 一條鞭法) was introduced.

Before its creation, the common taxation system was based on three types of taxes (see zuyongdiao system 租庸調) to be delivered by each adult male. The first type consisted of grain (zu 租), the second of silk fabric or linen (diao 調), and the third in corvée (yong 庸, see yaoyi 徭役). Parallel to this tripartite taxation system, peasant families were allotted a fix size of land in the so-called equal-field system (juntianfa 均田法).

Yet in the course of time more and more land was purchased by the local gentry, and the tendency to large estates (zhuangyuan 莊園) intensified. At the same time the rebellion of An Lushan 安祿山 (703-757) and the takeover of the provinces by military commissioners (jiedushi 節度使) deprived the central government of the Tang of the greatest part of its revenue. Hunger, exploitation and war drove peasant families away from their land, and in order to make good for the missing revenue, districts in the neighbourhood were taxed higher, thus only increasing the problem because more and more farmers would turn into refugees. The government therefore increased the household tax (yielding annually 2 million strings of cash) and the field tax (12.4 million shi 石 "bushels" of grain, see weights and measures), raising these two levies to the same height as the tripartite tax. Other sources of revenue tapped excessively during these years were salt (see salt tax) and each type of miscellaneous objects and services (zashui 雜稅 "miscellaneous taxes"). Of the annual state income of 12 million strings of cash (money in account) fifty per cent came from the salt tax. A concise résumé of the situation in the mid-eighth century was that "the data on the taxable persons (dingkou 丁口) were wrong; the sum of taxable fields was incorrect; and the economic structure of society was in disorder". A rearrangement of the tax system was thus necessary, in order to meet the high expenditure of the Tang government.

The first incidence of the taxation of landowners is recorded in 650, when locally a tax was levied in money (shuiqian 稅錢) to finance the salaries of officials. First attempts at tax reform were carried out in 764, when it was ordered that the household tax was to replace the tripartite tax, which was in effect a poll tax system. A year later the emperor decreed that no tax was to be levied apart from the zu (grain) and yong (service) tax. Diwu Qi 第五琦 (712-782), metropolitan magistrate (Jingzhao yin 京兆尹), suggested to reintroduced the ancient system of ten to one, in which one eleventh of the revenue was to be handed over to the authorities as "official tax" (guanshui 官稅). In reality, this would have increased the tax burden for the peasantry. In 770 a decree ordered that in the metropolitan region fields of superior quality (shangtian 上田) were taxed at 6 sheng 升 per mu 畝 of land for the summer tax (xiashui 夏稅), and inferior fields (xiatian 下田) at 4 sheng. The autumn tax (qiushui 秋稅) would amount to 5 sheng per mu for superior fields, and 3 for inferior ones. This was the first time that tax in kind was collected twice a year, and according to the field size. Between 764 and 766 the government launched another test with a tax called "green-sprouts field money" (qingmiao ditou qian 青苗地頭錢), which was levied on newly opened land (kentian 墾田) at a rate of 15 cash (wen 文) per mu.

In 780 Counsellor-in-chief Yang Yan 楊炎 (727-781) suggested measures for remedying the unfeasible tax system. The first was to reduce the types of taxes to the field tax (dishui 地稅) and the household tax (hushui 戶稅) in order to create a simpler levying method. Any miscellaneous taxes (keza 苛雜, zashui 雜稅) were abolished and were, together with the "various corvée duties" (zayao 雜徭), integrated into the regular taxes (zhengshui 正稅). The latter consisted of a grain tax levied in kind and according to the size of land cultivated, and a household tax levied in money per household, but substitutable by textile fabric. The second measure was to define the height of the tax levy by means of calculating the expenditure for the coming year. Its principle was to "measure expenditure to define the income" (liang chu yi zhi ru 量出以制入). For this purpose, surveillance commissioners (guanchashi 觀察使) and regional inspectors (cishi 刺史) were sent out to each circuit (dao 道) to control the land and household registers. The budget of each circuit was then to be calculated by setting expenditure against income. In this way, the central government would be exactly informed about the financial revenue of each part of the empire. The third measure was the creation of a twice-taxation system.

The first step was a detailed revision of household registers. These included also tenant farmers (kehu 客戶), state officials and Buddhist monasteries which had until then be freed from tax payment. There would be no distinction between the owner and the tenant of fields (hu wu zhu ke 戶無主客). In a second step the productive capital in each district and prefecture was calculated according to a system of nine income levels (sandeng jiuji 三等九級). The tax imposed on each household would thus be fairly distributed according to economic and social conditions. Even the privileges of the aristocracy were curtailed. Merchants were obliged to pay one thirtieth of their profit. This was the first time that other occupations than farmers were regularly integrated into the tax scheme of an imperial dynasty. The tax was transformed from a poll tax to one in which everyone was "liable according to his wealth" (yi pin fu wei chai 以貧富為差).

The field tax (dishui) was based on the census from 779, and its figures served for the first application of the twice-taxation system (liangshui yuan'e 兩稅元額). The simplification of the tax system did not mean that the regulations for labour service were abolished. The figures on male adults (ding'e 丁額) from the ancient registers still served in case the local government needed labour force for public projects. The land was divided into two types that were differently taxed. Newly opened land (xinkentian 新墾田) was, for instance, generally taxed at 2 sheng per mu. Yet "old fields" were differently taxed, according to the quality of the soil. Superior fields (shangtian) were taxed at 1 dou 斗 1 sheng per mu, and inferior ones (xiatian) at 7 sheng. Taxes were collected twice a year, once in summer, and once in autumn. This procedure gave the system its name. Other explanations of the term are that the tax was composed of a household tax (hushui) and a land tax (dishui), or of a combined tax on landed property and on profit.

The household tax (hushui) was collected together with the field tax, in money or in kind (textile). The tax revenue of each circuit was distributed into three directions, either it was sent to the capital (shanggong 上供, later called qiyun 起運) or to a defined place (songshi 送使) like border garrisons or the granaries of the circuit, or to the subordinated prefectures (liuzhou 留州, later called cunliu 存留) for local use.

The new tax system stimulated peasants to keep their fields, and thus supported the recovery of the economy. Apart from higher revenues, the central government was also able to exert a tighter control over the provinces. The twice-taxation system was a great change from a system based on individuals to one based on profit and property. Yet it did not liberate the peasantry from the corvée, nor did it prevent cases of underreporting. The basic figures of the household registers from 779 were furthermore far from perfect, and it was impossible to revise the household registers every three years, as had originally been envisaged. The ideal that government expenditure was fully covered by the tax revenue by simple means of advance planning failed to realize. The Tang were never able to levy as much taxes as they spent for administration and defence. The agglomeration of land in the hands of the rich was not impeded by the new tax system, and the everlasting social problem of landless farmers continued to plague the Tang government.

A further problem was the calculation of the taxes in money, which made a conversion into kind a matter of long negotiations, and more often than not disadvantaged the farmers, all the more as there was not sufficient money on the markets to deliver taxes in cash, and the "price of money" therefore rose in contrast to that of textiles or grain. And finally, extra "miscellaneous taxes" like the "green-sprouts money" continued to be levied, first of all the salt tax. Even after the introduction of the twice-taxation system the salt gabelle constituted far more than fifty per cent of the total state revenue.

The Song dynasty 宋 (960-1279) continued the system but also levied a poll tax (dingshui 丁稅) and miscellaneous taxes. The Yuan dynasty 元 (1279-1368) changed the name of the levy to shuiliang 稅糧 "tax grain". The Ming finally merged the substitutional fee for labour service with the field tax and introduced the "single-whip method" of taxation.

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