Wednesday, August 15, 2012

On the dangers of tax farming

Marcus Licinius Crassus: tax farmer and power broker

The tax payer funded farce formerly known as the British railway system is probably the most expensive railway in the modern world.  While consumers suffer overcrowded services, the train leasing companies are making killings whilst also using offshore subsidiaries to shift the profits from their leasing activities.  And tax payer and rail travellers pick up the bills.

In an article in today's edition of the Times Literary Supplement, classics scholar Mary Beard explores the striking similarities between the contemporary world and ancient Rome in its dying days as a republic, and warns of the dangers to democracy opened up by tax farming. Read the full article here, what follows is the opening extract:

Modern tax farming: and the Roman dangers of private enterprise

800px-Virgin_trains_221113_glasgow

In an hour or so we shall hear which bid has been accepted to run the West Coast Mainline  railway route: First Group's or Virgin's (and by the time you read this, you'll probably already know). And the news broadcasts are full of dire warnings about how the government should decide. It's not just a question of accepting the highest bid to run the service. If a company bids too high for the contract then, they find it much harder to make a profit -- so they start cutting services and the public get cross (= political votes lost), or worse, they have to renege before the contract is finished (=more egg on face, and more votes lost).

I'm surprised that no-one has mentioned the ancient Roman precedent here. Because they had just these problems and their form of private enterprise gone mad was one of the factors that led to the end of Roman republican democracy and ultimately the rise of autocracy.

The jewel in the crown of Roman private enterprise was tax farming. When the republican Romans wanted to (say) impose taxes on a province, they didn't collect the taxes through state officials, but by offering the tax contract to rival bidding companies -- of "tax-farmers" or publicani (the 'publicans' of the King James Bible).

Read on here.

Hat tip: Jonathan Davies

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