LAND TENURE: AN INTRODUCTION

LAND TENURE: AN INTRODUCTION
by
Sumner J. La Croix
Working Paper No. 02-13
May 2002
Land Tenure: An Introduction
By
Sumner J. La Croix
Department of Economics, University of Hawaii
East-West Center
Working Paper No. 02-13
May 2002
Abstract
Land tenure refers to the bundle of rights and responsibilities under which land is held,
used, transferred, and succeeded. This essay surveys land tenure arrangements
throughout the world since the Roman Empire. Particular attention is paid to how six
forms of land tenure emerge, function, and change. The six forms of land tenure
analyzed are (1) owner cultivation of small, private lands; (2) squatting on public or
private lands; (3) large estates or latifundia; (4) feudal tenures with bound and unbound
labor; (5) communal tenures; and (6) smallholder leasing from private landowners.
Land tenure refers to the bundle of rights and responsibilities under which land is
held, used, transferred, and succeeded. The meaning of the term varies with context. It is
used to refer to land tenure prescribed by statutory or common law; to customary land
tenure; and to observed land tenure practices in a particular historical context. Land
tenure arrangements vary enormously across urban and rural areas primarily because of
the use of land for agriculture in rural areas and for residential and business use in urban
areas. Economic historians have focused on analyzing tenure systems on agricultural
lands, as until the twentieth century the majority of people in most societies earned their
livelihood by cultivating the land; accumulated wealth by improving the land; and
transferred wealth to the next generation by bequeathing the land.
Land tenure can be categorized along three essential dimensions: (1) the presence
or absence of formal land title, defined as registration of ownership rights with a
government authority; (2) the extent of landowner and landholder rights to contract
voluntarily for use of the land; and (3) the spectrum of private-communal property rights
to the land. At one end of the spectrum is the independent farmer owning land with
freehold (or fee-simple) title. Freehold title is perpetual; inheritable to a successor
designated at will; freely alienable; often registered with a central authority that has
undertaken a survey of the land (sometimes called a cadastral survey); and characterized
by fixed annual obligations. At the other end of the spectrum, bound laborers work on
parcels of land temporarily assigned to them by authorities in a communal land system.
Changes in land tenure are induced by a wide variety of factors including relative
prices of inputs and outputs; transaction costs; government policies; preferences of
farmers and landlords; and technology. To illustrate how forms of land tenure emerge,
function, and change, six forms of land tenure are analyzed below.
1. Owner Cultivation of Small, Private Lands. Owner cultivation of small
private land parcels was a major form of land tenure in the Roman Republic, as soldiers
were granted small parcels from lands taken from conquered peoples. Despite its early
emergence, owner operation of small farms is relatively recent, emerging in Europe and
Asia as feudal institutions were dismantled; in North America from the beginning of
colonial settlement; in Japan after land reforms were implemented in the late nineteenth
century and after World War II; in Taiwan in the early 1950s; in the former British
colonies of India, Canada, Australia, South Africa, and New Zealand in the nineteenth
and twentieth centuries; and in South America in the second half of the twentieth century.
Owner-cultivated farms have been praised as an ideal arrangement to foster and
encourage democratic institutions and for the incentives offered to small farmers to
properly manage their lands and to adapt to changing circumstances. Wage laborers on
farms often set a goal of moving up the “agricultural ladder”—from wage laborers to
share tenants to owner operators.
Family-managed farms may, however, not always be the most efficient forms of
agricultural organization. Families may have inadequate managerial skills to manage the
farm; may not have sufficient family labor; and may not reap full economies of scale on
their small land parcel, among other things.
2. Squatting on Public or Private Lands. Some citizens of the Roman Republic
received grants from the government to occupy conquered lands, while others—
squatters—occupied and farmed these public lands without first obtaining a formal lease
or land grant. Squatting is observed on privately owned lands and in run-down sections
of urban areas in developed countries, on public lands near or at the frontier of
settlement, and in the urban areas of poor developing countries. It was prevalent
throughout the Americas from the beginning of European colonization through the
nineteenth century and is still a major form of land tenure in South and Central America,
particularly in Costa Rica, Brazil, and Columbia. Sheep and cattle herders in the Cape
Colony in the eighteenth century and in Australia from the 1820s to 1840s squatted on
frontier lands at and beyond official boundaries.
The impact of squatting on economic development has been much debated.
Squatting has been criticized as encouraging disorderly settlement; bringing settlers to
regions without churches, schools, or proper infrastructure; and encouraging violence
between competing claimants to lands. It has also been praised as facilitating
development by superseding overly restrictive government land policies of settlement at
the frontier. In urban areas in many developing countries, squatting on public and private
lands has emerged as a response to large-scale immigration and growth of populations
living in poverty. It has been criticized as impeding growth in these same urban areas by
forsaking the use of land for collateral; by restricting transfers of parcels; and reducing
the value of land in intergenerational wealth transfers.
3. Large Estates or Latifundia. In the second century BC, wealthy Roman
families received leases of newly conquered lands and were able to consolidate lands of
some farmers serving in the army into ranches and large farms known as latifundia.
Centered around a central villa, these lands were typically worked by slaves from
conquered territories or by tenants at will. With the establishment of the Pax Romana in
the first century AD, supplies of slaves from conquered territories declined, and latifundia
managers responded by dividing the latifundia into smaller parcels and leasing them to
small holders (coloni). In other instances, small landowners would commend themselves
and their land to latifundia in exchange for protection against central government
exactions and invading tribes.
Similar land holding arrangements have emerged in other societies in which
governments have leased or granted large tracts of land to wealthy families or small
holders at the frontier have commended their lands to a patron. In South America, the
Spanish Crown granted lands and the rights to the labor of their indigenous people to a
small number of families in the sixteenth and seventeenth centuries. Some economists
have argued that land laws in South America were heavily influenced by this initial
allocation of lands and were structured to enhance the position of the large property
owners to the detriment of small independent farmers. As landowners in South America
gradually lost their rights to indigenous labor in the seventeenth century, they secured a
new supply of labor by requiring peasants to provide labor services in order to gain
access to land. Large estates with patron-client labor arrangements—latifundia—
persisted throughout much of Latin America until the mid-twentieth century.
4. Feudal Tenures With Bound and Unbound Labor. With the fall of the
Western Roman Empire in the fifth century A.D. and the consequent decline in law and
order came the rise of the manorial system in Europe. The system had many variations
across time and place, thus the following description is a stylized account. A king
owning all lands kept some lands (demesne) and granted others to lay and ecclesiastic
lords in exchange for military service and loyalty. Some lords assigned their lands to
followers in exchange for services and loyalty, a process known as subinfeudation.
Peasants commended themselves to a lord in exchange for protection, provision of
justice, and a plot of land, in the process becoming bound to the land. These peasants
(serfs) held land subject to servitudes of work and produce as well as approval of
marriage, inheritance, and migration. Production was partially organized by the village,
with individuals typically cooperating on plowing the land and allowing communal
grazing on stubble left after harvest. During the growing and harvest seasons, each serf
tended individual parcels, which were often scattered in small strips throughout the
manor lands. Serfs were obligated to work on the lord’s demesne for a fixed number of
days.
In the manorial system, individual rights to rent, transfer, succeed, and use land
were limited due to communal property rights over the land. Attenuated individual
property rights required that the manorial system adopt elaborate rules to structure
production and distribution of agricultural output. These rules prevented participants
from shirking or claiming a disproportionately large share of output.
The growth of markets and population in Western Europe between the eleventh
and thirteenth centuries induced changes in the feudal system. Labor dues were
commuted into money payments; the demesne was leased for money rents; tenant lands
became increasingly alienable. The Statute Qula Emptores (1290) formally abolished the
feudal system in England, although many of its habits and institutions would linger on for
centuries. While the Black Death crisis of the fourteenth century made labor more scarce
and led to attempts to re-impose feudal obligations on tenants, the dismantling of
traditional land tenures continued in Western Europe, as exemplified by the English
enclosure movements of the sixteenth and eighteenth centuries. Lands enclosures were
the results of a legal process that converted the common rights of villagers on specified
waste, arable, and meadow lands to private titles and consolidated existing private
holdings in land.
Feudalism’s decline in Western Europe was mirrored by its rise in Eastern
Europe, as relatively free laborers became bound to the land during the fifteenth and
sixteenth centuries. Feudalism would not decline in Eastern Europe until the eighteenth
and nineteenth centuries. Serfdom was partially reformed in Russia in 1861 —the
workers remained bound to the commune—and was finally ended by the Stolypin
Reforms of 1906-1911 which freed Russian laborers from bondage to the commune,
established private titles, and consolidated peasant holdings. In Japan, bound labor was
still predominant in the early Tokugawa period, and tenancy only emerged in the
eighteenth and nineteenth centuries. In the 1870s, the Meiji government abolished feudal
tenures and established private property in land in conjunction with its reform of
agricultural taxation.
5. Communal Tenures. Communal land tenures have been prevalent in the
Pacific Islands and Africa; were the norm in North America, South America, and parts of
Asia until the European conquests; and are still used today in many indigenous
communities. Details of communal tenures differ across societies, so the following is a
stylized description of communal tenure in a Pacific Island village. There is a common
area that is used for future land development and can be used with certain limits for
gathering by villagers. Families carry out cultivation on scattered plots, with plots being
redistributed by chiefs or village elders as family size and land fertility change. For lands
requiring extensive improvement, tenure of particular households and their heirs may be
longer. Rights to continued use of village land by a household persist as long as the
household continues to cultivate its assigned lands.
Historians have often interpreted communal land systems as efficient responses to
social and economic environments with significant environmental risks, high information
costs, and poorly developed input, output, and insurance markets. Their flexibility has
frequently enabled adaptations to changing demographic, ecological, and social
conditions. In the nineteenth and twentieth centuries, economists have, however,
sometimes viewed communal land systems as impeding the growth of a modern market
economy.
Communal land systems were established by central governments in China and
Russia in the twentieth century after communist revolutions. After the 1917 Russian
revolution, the Soviet government under Lenin abolished private property rights in land
but in the early 1920s promulgated a pragmatic system of agricultural production (“New
Economic Policy”) that retained many features of smallholder-owner production.
Beginning in the late 1920s, Stalin began forced collectivization of peasant landholdings
and established central government ownership of farmlands and control of agricultural
production.
A similar process took place in China after the 1949 communist revolution when
lands were initially redistributed to tenants. By the late 1950s, peasant farmers had lost
their lands and were forced into collective farming institutions (communes) controlled by
the central government. In 1978 the Chinese government initiated land reforms
providing households with individual parcels of village land. The “Household
Responsibility System” allowed farmers to choose crops, methods of production, hours of
work, and capital and labor inputs. Villages frequently reallocated these lands among
households, thereby restricting their use as collateral. Agricultural output and
productivity rose significantly in the decade after its introduction.
6. Smallholder Leasing from Private Landowners. Contracts between owners
of agricultural lands and farm labor have varied enormously across time and place.
Different market structures in labor, capital, resources, and land markets; government
regulations; and geographic constraints have often produced a variety of smallholder
leasing arrangements that co-exist alongside one another. Economic historians have paid
close attention to three contractual provisions exhibiting wide variation over time and
across locations: land owner’s role in farm management, type of land rent, and contract
duration. Small land owners often choose to manage their lands themselves, using family
and wage labor in production. In other instances, small and large landowners have better
opportunities on other lands or in other occupations, and they lease some lands to tenant
farmers. Only a few crops exhibit substantial economies of scale in production, leaving
large landowners with incentives to lease parcels of land to small holders. Some leases
allow tenants to manage the farm themselves, while others provide limited roles for
landowners in farm management. They make crop choices, arrange for credit, and
procure various inputs such as fertilizers, pesticides, and farm animals, leaving tenants to
manage day-to-day production and monitor farm labor.
Tenancy often co-exists with self-managed farms. In the United States, numerous
farmers were tenants even when new land was available at the frontier. U.S. census data
show that mobility up the “agricultural ladder,” was common, with workers often starting
as landless laborers, becoming a tenant farmer, and finally becoming an owner-occupier.
Such mobility was lacking in India throughout the twentieth century as social sanctions
often stopped lower castes from owning or leasing land. In the Tamil Nadu province of
India, sharecropping predominated in 1916; was partially replaced by fixed rent tenancy
in 1937 as landlords moved to cities; and declined further with land-to-the-tiller land
reform in 1959.
Controversy reigns over the incentive and efficiency effects of different types of
smallholder leasing. In his comparison of agriculture in France and England in the late
eighteenth century, Alan Young argued that sharecropping was responsible for the
relatively poor state of French agriculture. Alfred Marshall argued that sharecropping
implicitly imposed a tax on the labor input of tenant farmers and would reduce farm
productivity unless landlords carefully monitored tenant inputs. Some economists have
argued that sharecropping exists due to the willingness of risk-averse sharecroppers to
pay a premium to reduce their income variability. Some empirical studies of share
tenancy in India in the 1950s and 1960s show that output is lower under sharecropping.
Other economists have argued that sharecropping reduces incentives for tenants to
overuse (“mine”) valuable land and provides vital incentives for landlords to provide
managerial services. Empirical studies of African-American sharecroppers in the postbellum
U.S. South and of farmers in the U.S. midwest during the 1970s lend support to
efficiency theories.
Does the type of land tenure affect the adoption of new technologies? Only a few
studies exist, and they generally show that new technologies are adopted at about the
same rate by sharecroppers and other types of tenants. For example, studies of the
adoption of new rice varieties in the 1960s and 1970s generally show that sharecroppers
adopted the new technologies at about the same rate as other landholders. Technological
change has, however, often induced changes in the choice of land tenure. For example,
the introduction of the tractor after 1910 and the mechanical cotton picker after World
War II were major factors in reducing the incidence of share cropping throughout the
U.S. South during the twentieth century.
References
Alston, Lee J., and Joseph P. Ferrie, Southern Paternalism and the American Welfare
State: Economics, Politics, and Institutions in the South 1865-1965. New York:
Cambridge University Press, 1998.
Alston, Lee J., Gary D. Libecap, and Bernardo Mueller, Titles, Conflict, and Land Use:
The Development of Property Rights and Land Reform on the Brazilian Amazon
Frontier. Ann Arbor: University of Michigan Press, 1999.
Cheung, Steven N.S. The Theory of Share Tenancy. Chicago: University of Chicago
Press, 1969.
De Soto, Hernando, The Mystery of Capital: Why Capitalism Triumphs in the West and
Fails Everywhere Else. New York: Basic Books, 2000.
Hayami, Yujiro, and Keijiro Otsuka, The Economics of Contract Choice: An Agrarian
Perspective. Oxford: Clarendon Press, 1993.
Hayami, Yujiro, and Vernon W. Ruttan, Agricultural Development: An International
Perspective. Rev. edn. Baltimore: Johns Hopkins University Press, 1985
Powelson, John P., The Story of Land: A World History of Land Tenure and Agrarian
Reform. Cambridge, MA: Lincoln Institute of Land Policy, 1988.
Roumasset, James. Rice and Risk: Decision Making Among Low Income Farmers.
Amsterdam: North-Holland, 1976.
Sokoloff, K., and Stanley Engerman, “Institutions, Factor Endowments and Paths of
Development in the New World, Journal of Economic Perspectives 14(3),
(Summer 2000): 217-232.
Tuma, Elias, Twenty-Six Centuries of Agrarian Reform. Berkeley and Los Angeles:
University of California Press, 1965.

The Ottoman System of Taxation

Published in Review of Social Economy, 2004, 33(3): 329-341.
Department of Economics Working Paper Series
Efficiency and Continuity in Public Finance: The Ottoman System
of Taxation
Metin M. Cos¸gel
University of Connecticut
Working Paper 2004-02R
February 2004, revised October 2004
341 Mansfield Road, Unit 1063
Storrs, CT 06269–1063
Phone: (860) 486–3022
Fax: (860) 486–4463
http://www.econ.uconn.edu/
This working paper is indexed on RePEc, http://repec.org/
Abstract
Economic historians have recently emphasized the importance of integrating
economic and historical approaches in studying institutions. The literature on the
Ottoman system of taxation, however, has continued to adopt a primarily historical
approach, using ad hoc categories of classification and explaining the system
through its continuities with the historical precedent. This paper integrates economic
and historical approaches to examine the structure, efficiency, and regional
diversity of the tax system. The structure of the system made it possible for the Ottomans
to economize on the transaction cost of measuring the tax base. Regional
variations resulted from both efficient adaptations and institutional rigidities.
This working paper previously circulated under the title ”The Economics of
Ottoman Taxation”
EFFICIENCY AND CONTINUITY IN PUBLIC FINANCE:
THE OTTOMAN SYSTEM OF TAXATION
Metin M. Coşgel
Metin M. Coşgel is Professor in the Department of Economics, The University of Connecticut, Storrs, CT 06268, USA; email: Cosgel@uconn.edu.
Economic historians have recently made great progress in studying the past by applying the tools and concepts of New Institutional Economics. A fundamental element of this achievement has been to go beyond the narrow confines of previous approaches. Whereas the applications of narrow neoclassical economic analysis had typically lacked an appreciation for the role of history and focused primarily on the efficiency properties of institutions, the new trend has been to integrate economic and historical approaches for richer and more comprehensive explanations of how and why history mattered. Similarly, whereas unsystematic historical approaches had lacked sound theoretical basis and proceeded narrowly by focusing on how previous customs and traditions were responsible for the existence of an institution, the new approach has been to also examine the properties of the institution that ensured its survival.
The literature on Ottoman taxation, however, has somehow failed to benefit from these developments. A narrow historical approach has dominated the literature, as scholars have studied the regional, legal, political, and economic complexities of the tax system primarily by identifying continuities with the historical precedent in the Islamic law, the Byzantine state, or various other institutions of previous states. The Ottomans are said to have adopted the local
customs and methods of taxation that they inherited in a newly conquered region, combining with the tax codes of other regions as necessary. Referring to the Sultanic law code for land holding and taxation, Halil İnalcık provides this type of an explanation when he writes: “It was this law code, actually a combination of Islamic and local practices related to the Roman-Byzantine legacy, which administered the relationships in Ottoman landholding and taxation.” In an exemplary statement of how the dominant historical approach has tried to explain the tax system, he continues: “In fact, the system was closely analogous to that of previous Islamic and Byzantine states, and there was no reason for the Ottomans to revolutionize tested methods as long as the state received its revenues.”1
While İnalcık’s statement may be accurate in general terms, it cannot be taken as the basis for an argument against using a systematic, theoretical approach. Although the similarities between the tax systems of the Ottomans and their predecessors seem to support a narrow historical approach, identifying the historical precedents of tax categories does not by itself provide a complete explanation for why a certain mixture of taxes, and not something else, was adopted. The origins and the persistence of a tax system are different things. The key problem with İnalcık’s approach is that it does not explain why the Ottomans chose certain elements of the Islamic or Byzantine legacy and not others. That there were many components of previous tax systems, such as labor services, that the Ottomans carefully and systematically discontinued suggests the presence of some rules and a selection process that kept some elements of previous systems and discarded others. While conquering land from multiple predecessor states, the Ottomans inherited the tax systems of multiple legal and political traditions that needed to be molded into a coherent whole. History did matter, of course, at least by way of providing a menu of choices available to the Ottomans and in shaping the regional variety. But a satisfactory
1
explanation of the system as a whole demands that an appeal to history must be complemented with knowledge of the general structure of taxes and the forces that affected the Ottomans’ choice of one type of precedent over the others.
This paper aims to study the Ottoman system of taxation by integrating economic and historical approaches. Borrowing insights from recent developments in New Institutional Economics and using information from the published tax registers of the Ottoman Empire, I examine the overall structure and efficiency of the system and the way it was shaped by regional conditions and institutional history. Three objectives thus guide the inquiry. The first is to identify the general structure of the tax system. Although historians have proposed various ways of classifying Ottoman taxes, they have typically chosen ad hoc categories of classification, failing to determine the general structure of taxes or a mechanism to distinguish between them systematically. I construct an economic classification of taxes that depend on systematic differences in the tax base.
The second objective of the paper is to examine the efficiency of the tax system. Identifying the general structure of taxes makes it possible to ask why this, rather than some other, structure was chosen. Adopting an economic approach and focusing on the efficiency properties of the system, I argue that the choice of how to levy taxes on an item or activity was determined primarily by the cost of measuring the tax base.
The third objective is to explain the regional diversity of Ottoman taxes. Despite sharing a common structure, taxes varied significantly among the regions of the Ottoman Empire in names, bases, and rates. Some of these variations can be viewed simply as efficient adaptations of the system to local conditions. But a satisfactory explanation of the system as a whole requires that we integrate economic and historical approaches by studying not just how the
2
Ottomans were able to transform some taxes for efficiency but also how institutional rigidities prevented them from transforming others.
THE EFFICIENCY AND PATH-DEPENDENCE OF INSTITUTIONS
Methodological differences between the narrow variants of the economic and historical approaches originate primarily from the contrast between their views of institutions. In a narrow, ahistorical economic approach, an institution is simply the efficient solution to an economic problem. In this view, a process of competition would weed out inferior institutions, ensuring the survival of only those that best solve the problem. Institutions are thus endogenous responses to the environment, outcomes of some sort of a selection process that generates efficient results. It follows that changes in the environment (e.g., prices, technology) would create incentives to alter existing institutions and to construct new ones better suited to the new environment. The economic historian’s task then becomes to simply identify the economic problem and the competitive forces responsible for the existence of an institution.
According to an equally narrow historical view, competitive forces do not affect institutions. History is what matters. From an atheoretical and unsystematic historical approach to institutions, their existence is not directly associated with a particular property like equity or efficiency. An institution may survive not because it was a static efficient response to an economic problem but because it was the product of a dynamic and irreversible historical process in which past institutions determine the nature and evolution of those that exist today and in the future. To explain the prevalence and divergent paths of institutions, we need to examine their history.
3
Whereas some of the early works in economic history may have been from narrow variants of economic or historical perspectives, recent contributions have increasingly recognized the deficiencies of a one-sided narrow approach and aimed to bridge the gap between them. Economic historians would now generally agree that both competitive and historical forces matter in shaping institutions. The challenging task is to determine how exactly to integrate the two types of approaches for a complete explanation. The influence of history is sometimes described in economic history by the term “path dependence,” referring to the way outcomes are generated by allocative processes that are unable to break free from their own history. We need to know not only which institutions best served particular needs but also how societies often had distinct institutional trajectories that did not yield to competitive forces and why some societies could not easily transplant more successful institutions of other societies. Approaching from the other side of the explanatory scheme, we need to know how and why some institutions managed to break free from their historical path.
The importance of integrating multiple perspectives may be most evident in New Institutional Economics, where leading proponents have shifted positions from adopting an efficiency view of institutions to recognizing the importance of path-dependence. Douglass North, a Nobel Laureate pioneer of the New Institutional approach in economic history, has explicitly “abandoned the efficiency view of institutions” and proposed a more comprehensive analysis of institutions, institutional change, and economic performance.2 In addition to providing historical richness, New Institutional Economists have developed the tools and concepts of modern institutional political economy and used them to explain how and why history mattered. In other words, they have brought systematic theory to the task of explaining institutions. Some of the recent influential studies of the Middle Eastern institutions have also
4
come from this perspective as can be seen in the works of Timur Kuran and Avner Greif.3 It is now time to apply insights from these developments to examine the Ottoman tax system.
THE GENERAL STRUCTURE OF THE OTTOMAN SYSTEM OF TAXATION
Studies of the Ottoman system of taxation typically use the detailed information recorded in imperial registers (defter-i hākanī) for source. Upon conquering new lands, the Ottomans typically surveyed all taxable resources and activities and recorded the information in tax registers commonly known as the tahrir defterleri. As circumstances changed over time, they conducted subsequent periodic surveys in order to update the information on the empire’s current sources of revenue. The registers were used for a variety of purposes, including serving as official records to establish legal claims to land, assessing the empire’s expected tax revenues, and appropriating some of the revenues to the military and administrative officials as remuneration for their services. Fortunately, many of these registers have survived to the present, available to researchers in various archives in Turkey and other countries that were previously under Ottoman domination, making it possible to study the Ottoman system of taxation in great detail.4
At the beginning of each district’s register was its tax code, a document called kānūnnāme. 5 Tax codes show that the Ottomans did not use complicated tax instruments like the income tax or the value added tax for public finance, because they faced various constraints in their capacity to gather the information required to administer taxes. Instead, they relied on simpler and more feasible taxes like lumpsum taxes on shops, personal taxes with standard rates within a district or province, and production taxes that were collected as simple proportions of output or based simply on the amounts of land or another input. Because taxes were levied on
5
numerous groups of persons and activities, however, the resulting system was still inevitably complex. The types and rates of taxes could vary significantly between regions, making the system more complicated. It must have been complicated enough, even perhaps for the government’s own agents, that the government felt obligated to carefully lay out the basic tax regulations of each district in a formal code and to specify the rates at which each tax was to be collected in different circumstances.
To reduce the complexity of taxes, we need to classify them by using a coherent standard. Previous classifications of taxes, however, have not been satisfactorily coherent or enlightening. Whereas some historians have examined each tax in isolation and thus avoided the problem of classification, others have classified them based on ad hoc or purely legal, rather than economic, categories. As an example of the former, Neşet Çağatay described taxes in an encyclopedic style by taking them in an alphabetical order, making no attempt to group them into categories.6 Although this work, as one of the earliest studies in the field, undoubtedly contributed to our understanding of the Ottoman system of taxation, such an approach is ultimately incomplete and unsatisfactory because it fails to provide the framework around which each of these taxes were collected. As an example of the latter, İnalcık grouped tax revenues recorded in the tax registers into four groups: personal taxes, tithes, various fees and fines, and extraordinary levies.7 Lacking a clear theoretical basis, however, this ad hoc classification is also unsatisfactory and confusing. It is not clear, for example, why fees on some agricultural products and fines on criminal misdemeanors belong to the same category, and how tithes are to be distinguished from other taxes on agricultural products. Although the distinction between categories may have been based on the method of collection (cash vs. in-kind), this does not explain why personal taxes, collected in cash, were put in a separate category than fees and fines.
6
Ottoman taxes have also been studied within a legal framework by distinguishing between Islamic and customary taxes.8 For example, whereas the tithes had a well-established basis in Islamic taxation, some of the personal taxes used by the Ottomans had no clear basis in the Islamic law. Although the distinction between the Islamic and customary taxes may have been useful in identifying the legal precedent for taxes, it does not help to understand the basic structure of the system as a whole. It does not help to distinguish between the taxes found within each category or to similarly identify commonalities between the taxes found in the two categories. For example, distinguishing between the Islamic and customary origins of taxes does not help to understand the differences between various Islamic ways of taxing agricultural products, such as the difference between the tithes used in taxing wheat and the fees used in taxing fruits and vegetables. It similarly does not help to understand the commonalities between taxes with Islamic and customary origins. The tithes observed in the European provinces that the Ottomans simply preserved from the tax systems of predecessor Christian states, for example, are essentially identical to those observed in the Arab lands, though their legal basis may have been different. Although previous ad hoc or legal classifications of Ottoman taxes may have served well for some purposes, they do not provide a coherent framework for classification and a consistent procedure for differentiation.9
Despite the enormous complexity of the Ottoman system of taxation on the surface, it had a simple basic structure. To understand the fundamental elements of this structure, let us use simple insights and concepts from the economic theory of taxation and follow the usual analytical procedure of classifying taxes according to their base. A tax base is simply the item on which the tax is levied. Ottoman tax bases can be grouped into three major categories: personal taxes levied on the persons or households, trade taxes on the goods and services brought
7
to market for sale, and production taxes on various farming and manufacturing activities. The Ottoman budgets included other sources of revenue, such as the tributes from vassal states, profits from government owned enterprises, and revenues from various fees and fines like the marriage fees and criminal fines.10 Because of our focus on tax revenues, other sources of revenue are excluded from this classification.
Legally, personal taxes resulted from the dependent status of the subjects. 11 Although the names and rates of personal taxes could vary among regions, they were commonly levied on the persons or households. The tax rates could vary among taxpayers, depending on their observable characteristics like land ownership and marital status, which served as an index of their ability to generate income and pay taxes. For example, under the conventional system of taxing subjects, a married subject who held farm land workable by a pair (çift) of oxen paid the çift tax, which was higher than the amount paid by bachelors (resm-i mücerred) and those possessing less than a çift or no land (resm-i bennāk). Those unable to work, such as the elderly and the disabled, were exempted from personal taxes.12
Table 1 shows examples of personal taxes in the Ottoman Empire during the fifteenth and sixteenth centuries. Representing the differences in rates and the geographical diversity of the Empire during this period, the Table includes information from such diverse districts as Jerusalem in eastern Mediterranean, Budapest in Europe, Bursa in western Asia Minor, Erbil in northern Iraq, and Antep and Malatya in eastern Asia Minor.13 Personal taxes were typically levied in cash. The rates for the çift tax, for example, were specified in terms of the Ottoman currency of akçe and varied from being 33 akçes in Bursa in 1487 to 50 akçes in Erbil in 1542 and Malatya in 1560.
8
The second general category of Ottoman taxes was the trade taxes that applied to market exchange of goods and services. Trade taxes included customs dues and the general market tax, exacted on items brought for exchange into towns and villages that hosted the periodic markets. The tax base was the item brought in for trade. The tax codes, especially of districts with large markets, specified the rates at which various goods, spices, animals, slaves, and agricultural products were to be taxed. In some places trade taxes took the form of gate dues that applied to items in-transit or brought in for local consumption. Items could also be taxed at ports or river crossings. Although most trade taxes were levied in cash, the tax rates for some items were specified in-kind. In the Jerusalem district, for example, whereas fruits brought to market were taxed at the rate of one-thirtieth, linens were taxed at twenty akçes per camel-load.
In the third category were the production taxes that applied to various productive activities in agriculture and manufacturing. These taxes can be further divided into three subcategories depending on the tax base: output taxes that were levied on the total output of an activity, input taxes on one of the inputs used in production, and enterprise taxes on the activity as a whole.
Output taxes consisted of the tithes (öşür), applying primarily to grains, legumes, and fibers. Taxes on these products were to be collected in kind, as a share of the total output. The usual rate was one tenth, typically with an additional one fortieth, called salāriye, collected as fodder for the horses of the fief-holder. As Table 1 shows, the rates could vary significantly between regions, sometimes even between villages within a region. Despite such variations, however, output taxes throughout the Empire had the common property of being based on the harvested product and collected at rates specified as a percentage share of the total output. The
9
usual rate of one-tenth, for example, meant for the tax collector to claim his share immediately after the harvest as ten percent of the output of wheat, barley, lentils, and so on.
Input taxes applied primarily in the taxation of fruits, vegetables, and animal products. Taxes for these items were levied on the land, trees, or other inputs used in their production, rather than on total output. For example, taxes on the production of fruits, nuts, and dates depended on the number (sometimes also the age, height, and type) of trees. Similarly, taxes on vineyards typically depended on the number of vines, taxes on vegetables depended on the amount of land allocated to them, and taxes on animal products depended on the numbers of animals or other inputs like beehives.
Enterprise taxes were levied not on the total output or one of the inputs used in production but on the activity as a whole. In towns, they applied to retail stores and manufacturing enterprises like dye-houses, tanneries, juice-makers, slaughter-houses, and soap-makers.14 This method was also used in the taxation of agricultural production in uninhabited lands called mezra’as and in some small or remote villages. The tax rate for enterprise taxes was specified as a lump-sum payment, presumably determined by some estimate of the profitability of the enterprise. Because enterprise taxes were customized to activities, the tax codes typically did not codify standardized rates for these activities (except for some rare occasions, such as when they specified the tax rates for retail stores as “per store”). Because the lump sum rates thus showed great variability in the tax registers, they are not reported in Table 1.
To show the relative importance of different tax categories for Ottoman finances, Table 2 reports the proportional share of each category in representative regions of the Empire, calculated from the tax registers of these regions.15 The proportions of tax categories show significant variations among these regions and over time, probably based on such factors as
10
differences in tax rates and climatic and soil conditions. Despite these variations, one can see a clear pattern: a majority of the tax revenue in most regions came from output taxes, and trade taxes typically constituted the smallest proportion.
THE EFFICIENCY OF THE OTTOMAN TAX SYSTEM
Because the ultimate objective of a tax system is to maximize revenues, it is reasonable to expect the system to be designed to raise revenues as efficiently as possible. To examine the efficiency of the Ottoman system of taxation, let us leave aside for a moment the effect of history and focus instead on the system’s ability to solve economic problems. The issue is to explain the logic and structure of the tax system, why the tax on some items or activities were levied on one type of base and others on another type. For example, why were the taxes on grains typically levied on the output, while those on fruits and vegetables levied on one of the inputs? Similarly, why were trade taxes levied on items brought to the market for trade, rather than on the revenue or profits from the trade or as a personal lump sum payment on the tradesman himself? Within each broad category a number of subcategories could be observed, depending on, for example, whether to base the input tax on land, livestock, trees, or other capital inputs; on which products to levy output taxes, and how to determine the relevant characteristics of taxpayers for personal taxes. Moreover, because new types of taxes could be created by mixing these categories in many different ways, possibilities were numerous.16
To explain various organizational forms observed in history, economic historians have viewed them as institutional responses to the problems posed by risk and transaction costs. In a hypothetical world without risks or transaction costs, the organization of production and exchange activities would not affect the use of resources. But in reality both risk and transaction
11
costs exist and pose problems. The presence of risks may pose problems because if we do not know which outcomes may realize tomorrow we would have to change the allocation of resources and the design of institutions today in order insure against the undesirable outcomes of tomorrow. The presence of transaction costs may also affect outcomes because if the information required for an activity or exchange is costly and imperfect, institutions would have to be designed to solve the information problem as cheaply as possible. Economic historians have used risk or transaction-cost based approaches to explain various interesting organizations and institutional arrangements observed in history.
CAN AGRICULTURAL RISKS EXPLAIN THE TAX SYSTEM?
To determine whether a risk based explanation of the structure of the Ottoman tax system would be satisfactory, one would have to start by observing how differently risks would have been allocated under different types of taxes. Focusing on production taxes, it is easy to see how output taxes would have had different implications than input or enterprise taxes for how disasters would have affected the after-tax incomes of the taxpayers. Suppose an activity was subject to the output tax. This method would have made it possible for the taxpayer to shift part of the production risk onto the state, because if there was a crop failure, taxes would have also fallen proportional to the reduction in output. But if the same activity was subject to the input tax, the crop failure would have only affected the taxpayer’s income because the amount of taxes would have remained unchanged. The same was true for enterprise taxes. Under both methods, the producer would have assumed all the risk. Output taxes would have thus provided better opportunities for the state and the taxpayers to share risks.
12
How the difference between taxes in facilitating risk sharing would have affected the choice of taxes would depend on the risk attitudes of the state and the taxpayers. If the state or the taxpayers were indifferent between risky and safe incomes, for example, there would have been no reason to expect the presence of risks to affect the tax system because it would not have mattered which type of tax was used to generate revenue, all else being the same. But it is more reasonable to suppose that the taxpayers were risk averse and that the state was better able to deal with risks than taxpayers (because it was able to diversify the risk among taxpayers and regions). In that case, a state concerned with the welfare of its taxpayers would have been expected to accommodate their risk aversion and improve aggregate welfare by choosing output taxes over other types in taxing an activity.
There is some frequently cited evidence from the pre-Ottoman times, dating back to the eighth century, which seems to support the importance of risk considerations in determining the choice between tax types in this region. Based on a petition by the peasants of Iraq during the 770s, the Caliph is said to have agreed to (re)introduce output taxes (the muqāsamah method) in order to facilitate the sharing of risks between the government and the peasants.17 Assuming that the risks were still high during the fifteenth and sixteenth centuries and that the means for insuring against them were still limited, one could extend the argument to the period of the Ottoman rule and argue that it was because of risk considerations that the Ottomans used output taxes for grains.
A complete explanation of Ottoman taxation, however, must account for not just why output taxes existed but also why they coexisted with input, enterprise, and other types of taxes within the same system. The coexistence of taxes can be explained only by factors that varied among activities. For example, if the distribution of production risks was the primary
13
consideration, then one would have expected output taxes to consist of the highest risk products. The typical mixture of input and output taxes observed in Ottoman taxation, however, does not seem to support this expectation. Some of the products that were subject to input taxes were actually more prone to product failure due to pests, disease, and severe weather than some of the other products that were subject to output taxes. For example, whereas all fruits and vegetables, regardless of their delicateness and perishability, were typically subject to input taxes, some of the hardier grains were subject to output taxes.18 Moreover, if the distribution of production risks was the primary consideration, then there would have been no reason for input and enterprise taxes to coexist as subcategories of production taxes. Under both types of taxes, the tax amount would have been independent of the actual level of output and the taxpayer would have thus assumed all the risks.19
MEASUREMENT COSTS AND THE TAX SYSTEM
For a more satisfactory explanation of Ottoman taxation, let us turn to transaction cost economics. In market exchange the transaction costs include the time, effort, and other resources used in locating parties to trade with, negotiating the terms of the trade, and drawing up and enforcing contracts. In the transaction cost approach to the analysis of organizations and institutions, their presence and form are treated as the results of choice, subject to the constraints of transaction costs. If these costs were zero, it would not matter which institutional or organizational form is chosen for production or exchange activities. But when transaction costs are positive, the efficiency principle requires that the form that best economizes on these costs should be adopted. Various organizational arrangements can thus be explained in terms of how the costs of transactions vary among alternatives. By focusing on transaction costs, economic
14
historians have been able to explain a variety of institutional arrangements, including the firm, sharecropping, and manorial contracts.
Although the transaction cost approach has been used primarily in the analysis of private organizations and institutions, it can easily be extended to the analysis of the public sector and tax systems. If the transaction costs were zero, it would make no difference which base the government uses to tax an economic activity. In taxing production, for example, the government can raise the same amount of revenue by any combination of input, output, or enterprise taxes, ranging from levying the amount on only one of them to an equal or varying amounts of each. But in a world complicated by transaction costs, the cost may vary significantly among taxable activities and bases, making it costlier for the government to collect taxes by some methods than others. In that case, the difference in transaction costs may explain why some activities are taxed by one type of a base rather than another.
The transaction cost that is most relevant in studying taxes is the cost of measuring the tax base.20 These are simply the time and resources required to determine the value of the tax base, such as those that would be needed in classifying different types of items constituting the base (possibly varying in shape, size, ripeness, and so on), quantifying the total amount in each category, and estimating the monetary value. By focusing on measurement, we are able to explain both the choice of taxable economic activities and the choice of a base for their taxation. Efficiency in tax collection typically restricts states to tax only observable activities, and the Ottoman state was no exception. Consumption, for example, was generally not taxed because it was difficult to observe. Non-market exchange and productive activities that took place at home, such as cleaning and cooking, were similarly not taxed. Instead, easily observable activities like market exchange and agricultural and manufacturing production were taxed. Once the state
15
decided to tax an activity, it was also important to choose a tax base that could be easily measured. It would not have been sufficient for the cost of measurement to be low to the taxpayer himself, because he had an incentive to hide revenue whenever possible. The state or its agents who received the taxes had to be able to measure the tax base independently at low cost. Moreover, hiring a tax collector introduced a principal-agent problem to tax collection, accompanied by agency costs. For example, the tax collector could make side-agreements with the tax payer to collect reduced taxes in return for a transfer payment to himself (a bribe).
Examining differences in the cost of measurement in light of the Ottoman economy of this period helps to understand the structure of the tax system as a whole. Trade taxes, for example, were based on observable items like the goods brought for exchange, rather than the costlier to observe exchange itself, which is consistent with our knowledge of the institutions and technology surrounding exchange at this time. Similarly, because the state could not directly observe the marginal product of labor or the income generating capacity of individuals, personal taxes were based on the household as a whole or on observable characteristics like marital status and land ownership.
To illustrate the importance of the cost of measurement in detail, let us focus on production taxes and explain the choice between the output, input, or enterprise as the base in taxing a productive activity. Comparing the cost of measurement helps to understand the observed subcategories of production taxes, with taxes on grains levied on the output, those on fruits and vegetables on one of the inputs, and taxes on manufacturing activities on the enterprise itself. Once again, if the output of activities could have been measured at no cost, they could all be taxed under the category of, say, output taxes and there would have been no need for input or enterprise taxes. The total output would have been the tax base, and the tax amount would have
16
been determined either as a proportion of output or as its cash equivalent. In reality, however, the cost of measurement varied significantly among activities. Whereas both the producer and the tax collector could easily measure the output of some activities, for other activities the tax collector had to incur significant cost in determining the quality and/or the quantity of the output.21
The cost to the tax collector was probably the lowest for products like cereal grains, whose characteristics and harvest technologies made it easy to determine both the quality and the quantity of output at low cost. Because the harvested crop was fairly homogenous for these items, the tax collector did not have to incur high cost by inspecting the whole output closely in determining its quality. The quantity of cereal grains could also be determined at low cost. The technology for harvesting these products and the brevity of their harvest period made it easy for the tax collector to observe the output, and difficult for the taxpayer to underreport it.22 The division of the grain output could be a fairly simple matter of, for example, first threshing all the cut grain together and then dividing it between the parties, or similarly loading every nth wagon (with 1/n being the tax ratio) of the harvested grain as the share of the tax recipient.
The cost of measuring the output could be considerably high for other products like fruits and vegetables, because the total output could include products with significant variations in size, taste, shape, and ripeness. Even when the tax collector could have observed the quantity, the taxpayer could still increase his share of the output simply by keeping the best ones to himself. Given the taxpayer’s incentive to underreport the quality by such means, the tax collectors had to incur cost by physically being present (or hiring an agent) for close inspection of the quality of output. Not just the quality but also the quantity of total output could be difficult to determine for some products, in particular those with harvests lasting for a long time.
17
Because continual harvests created opportunities for such concerns as overnight theft, the tax collector would have had to incur cost in trying to prevent any crop from being withdrawn from division, which would have resulted in a high cost of determining the quantity independently.
Whenever the cost of measuring the output of an activity was prohibitively high, the next-best alternative for the state could be to choose one of the inputs as the tax base. For the input tax method to be an efficient alternative, however, the quality and quantity of the base had to be easily observable. Land and trees, for example, were better candidates than seed, water, fertilizers, and labor. The taxpayer could not evade taxes by underreporting the amounts of trees and land used in production, because their amounts remained fixed during the production period and the tax collector could easily observe them. The production tax on fruits was thus typically levied on the number of trees, and the tax on vegetables was levied on the amount of land allocated to them. Whenever it was expensive to measure the output of an activity but cheap to measure one of the inputs, the activity was taxed by the input tax method.
When neither the output nor any of the inputs were easily observable, the last resort for the state was to tax the activity as a whole. This was typically the case for manufacturing enterprises like juice-makers and soap-makers in towns and agricultural production in remote villages or uninhabited fields. 23 Because the cost of measuring the output or one of the inputs of these activities would have been very high, the state determined the tax amount as a lumpsum payment that was levied on the enterprise itself.
EXPLAINING REGIONAL DIVERSITY
The structure of the Ottoman system of taxation shared many elements with those of preceding and contemporary states, suggesting the presence of a selection process that caused
18
these structures to converge toward an efficient ideal. Output and input taxes, for example, were similar in principle to the basic categories of Islamic taxation of production known as the muqāsama and misā􀂭a methods.24 Enterprise taxes were also similar to the maq􀃓ū’ method of assessment (sometimes also called dīmūs, a word of Greek origin from the pre-Islamic period). These categories typically formed the basic structure of the production taxes observed in various Islamic states that the Arab, Persian, Turkish, and other rulers had established in the Middle East before the Ottomans. Ottoman personal taxes also resembled those of predecessor states, in particular the Byzantine Empire.25 The çift tax, for example, was similar in principle to the Byzantine tax called zeugaratikion. These commonalities clearly support the view that the observed structure of Ottoman taxes had efficiency properties that made it more desirable than its alternatives.
Identifying the efficiency properties of the structure of taxes, however, is not the same as claiming that the system was efficient as a whole or that it was the same efficient system that ruled taxation in all regions of the Empire. The vast Empire that the Ottomans had built by mid sixteenth century had inherited not only common elements but also various idiosyncrasies from the customs and administrative practices of preceding states, and the tax system that they developed also reflected these idiosyncrasies. There were significant variations between the taxes observed in different regions of the Empire, some of which can be seen in Table 1.
The taxes in different regions varied in names and rate structures. Personal taxes, for example, varied significantly. Under the conventional system observed in Asia Minor, personal taxes were based on adult males, and the tax rate varied by marital status and land ownership. The subjects in Hungary, on the other hand, paid personal taxes in terms of the gate (kapı) tax,
19
for which the unit of taxation was the household, rather than adult males, and the tax amount did not change by marital status or land ownership. Moreover, personal taxes were not even fully implemented in all areas (though non-Muslim subjects throughout the empire paid a poll tax called cizye). In Jerusalem and surrounding districts, for example, the Ottomans did not introduce the çift tax or any other form of personal tax systematically levied on individuals or households.
Production taxes also varied among regions. Although the usual output-tax rate was one-tenth, a higher rate of one-fifth was applied in some of the provinces annexed after the mid-sixteenth century.26 The rates could sometimes vary even among the villages within a region. In the Palestine, southern Syria, and Transjordan region, for example, the rates varied between one-seventh to two-fifths in 1596. 27
Activities taxed under one category in one region could be taxed in another category in another region. Whereas beehive taxes were levied on the output of honey as output tax (under some circumstances) in Hungary, they were based on the hive itself as input tax in other regions. Similarly, there could even be differences within the same type of an activity within a region, as was the case for the taxation of olive products in the Arab lands. A clear distinction was made between the products of Rumānī trees (generally interpreted as referring to aged trees), taxed based on output, and İslāmī trees (younger trees), taxed based on the number of trees.
It may be possible to explain some of these differences from an efficiency view of the tax system. Taxes may have varied between regions as efficient adaptations to local conditions. For example, if the harvesting technology or the local stock of knowledge about the expected output varied significantly between two regions, then measuring the tax base of a productive activity may have been cheaper in some regions than in others, and the tax codes may have reflected
20
these differences by taxing the activity based on output in one region and based on input in the other. This may have been the reason for why beehive taxes were based on the output of honey in some regions and on the number of hives in others. Differences in production technology could also have caused the tax systems to vary. Research has shown, for example, that differences in irrigation technology was one of the reasons for the system of variable tax rates observed in the Fertile Crescent, where the output tax rates were higher in villages with easier access to irrigation water than in others.28
Some of the changes the Ottomans introduced into the tax systems of some regions after conquest also seem to support the efficiency view of the tax system. A well-known example of such a change is how the Ottomans abolished some of the feudal labor services. Whereas under the pre-Ottoman tax system the subjects owed labor services to their feudal lords, such as to build a barn, gather firewood, or work on his land, the Ottomans converted these service obligations to cash payments. Historians have often interpreted the Ottomans’ tendency to commute labor services as an example of their benevolence toward new subjects. But the phenomenon can also be viewed from an economic perspective as efficient adaptation of previous forms of personal taxes to the Ottoman system of government and taxation. Labor service would have been an inefficient method of payment for personal taxes. It would have caused efficiency distortions because the tax collectors would have had to incur cost monitoring the taxpayers, who had no incentives to work diligently for the tax collector, in order to ensure that the tax payment is made at the required amounts. Despite the inefficiency labor services could have survived under previous regimes because of path dependence. But a regime change provided the Ottomans an opportunity to discontinue excessive inefficiencies and highly undesirable elements. Although converting labor services to cash payments was by no means
21
peculiar to the Ottomans, as a centralized regime they had additional reasons for this conversion. Tax revenues were allocated not just to military personnel but also to the central and provincial governments.29 Because these governments did not directly engage in production, they had no need for labor services. Even the cavalrymen who resided in the countryside were likely to be away from the land during the production season, fighting in the battlefield for long periods, with limited time and ability to engage in production and maintain a large farm with heavy demand for labor services. These factors together meant that labor service was not a viable method of payment for personal taxes in the Ottoman Empire. The Ottomans thus significantly altered the historical precedent by converting preconquest labor services to cash payments, providing an example of the way economic principles shaped the selection from available methods of taxation.
It is difficult, however, to explain all components of the Ottoman tax system with economic principles only. If efficiency was the sole driving force in tax design, then the truly efficient system would have replaced all others, and regional differences would have been mere adaptations of this system to local conditions. But there are numerous other regional differences that are difficult to explain with economic principles or with an efficiency view of institutions. Consider some of the differences in tax bases and rate structures observed in the Empire. Among personal taxes, for example, numerous differences existed between regions in not just the local names of personal taxes but also in their bases and rate structures, raising the question of why the more efficient ones did not replace others. If it was more efficient to vary the rates of personal taxes based on the characteristics of adult males (because of, for example, varying abilities to pay), as was the case under the çift tax system, then one would have expected personal taxes observed in the Balkans (where the payment was based on the household as a whole, rather than individuals) to be replaced by the çift tax system. Similarly, if a uniform rate
22
for output taxes was more desirable, one would have expected it to replace the rate structure observed in parts of the Fertile Crescent with rates that varied between villages. But in both cases the Ottomans simply adopted the prevailing taxes and rate structures, making no systematic attempt to change things one way or another. They did not extend the çift tax system to the Balkans or the Fertile Crescent. Neither did they change the output tax rates that varied between villages in the Fertile Crescent to a uniform-rate system that prevailed in the rest of the Empire. It is difficult to explain such continuities of sharply different rate structures merely as efficient adaptations of the tax system to local conditions.
These examples indicate that certain institutions were more flexible than others and history was less of a constraint in some areas than in others. Although the Ottoman government’s ultimate objective in designing the tax system may have been to maximize tax revenues, they could not seek efficiency and minimize transaction costs as they wished. They needed to work within the parameters of various institutional constraints. But they were not completely bound by these constraints either. The challenge is to sort out these cases, and this paper contributes to this task.
One of the institutional constraints that could have affected the Ottomans’ choice of taxes was the legal system. Kuran has shown various ways in which Islamic law affected the institutional endowment of the Middle East.30 For example, the Islamic inheritance rules and contract law restricted the organizational forms available for business enterprises, and the rigidities of law governing pious foundations inhibited their autonomy and the provision of public services. It does not seem, however, that the legal system introduced significant rigidities into the tax system. There were two mechanisms for the Ottomans to avoid legal obstacles in tax design. The first was to take advantage of the controversial but legally recognized catch-all
23
category of customary taxes. Turkish states traditionally adopted a dual legal system particularly in public administration and taxation.31 The taxes that did not fit clearly into Islamic law could thus still be considered legal as belonging to the category of customary taxes. This was particularly useful in designing the tax code of a newly conquered area, where the Ottomans could adopt existing taxes under this category, rather than be forced to overhaul the tax system according to the principles of Islamic taxation. Various forms of personal taxes, for example, were incorporated into the Ottoman tax system as customary taxes. The Ottomans preserved even some taxes that were in conflict with general Islamic principles. Taxes on producing wine and raising swine, for example, were preserved in the Balkans, even though the consumption of alcohol and pork was banned under Islam. Although there were occasional debates within Ottoman hierarchy about the legitimacy of some of these taxes or the customary category as a whole, the presence of the category for the most part prevented the legal system from being a significant obstacle in tax design.
The other mechanism to avoid legal obstacles was to take liberties in interpreting the Islamic law itself. There were times when the shifting balance of power within the Ottoman government limited the independence of customary taxes from the Islamic law. Those designing the taxes were under pressure to justify the legitimacy of taxes under Islamic law. Given the importance of taxes for state revenues and the flexibility of Islamic law on taxation, however, the pressure was not necessarily a significant constraint. If they so wished, legal scholars could take liberties in interpretation that were in line with the interests of the government, for example by trying to fit customary taxes inherited from non-Islamic predecessors into the categories of Islamic law. This was the case when Ebu’s-Su􀃢ud Efendi, the famous minister for religious matters (şeyhülislam) of mid-sixteenth century, offered an interpretation of the çift tax as
24
belonging to a category of Islamic taxes called misā􀂭a, even though it was clearly developed after the feudal practices of previous non-Islamic states and thus had a different origin.
Although the legal system may have been an insignificant constraint on the choice of taxes, political obstacles were significant. There were at least two sources of rigidity in Ottoman politics with significant influences on the tax system. The first was from various pressure groups with vested interests in the prevailing system of taxation. This was most evident during conquests, which naturally aimed to alter previous forms of tax and property relationships while establishing the Ottoman rule. But in regions of power strongholds the process often required the Ottomans to take a gradual approach in changing the tax system, if at all. 32 In eastern Asia Minor, for example, they preserved the rights of some landholders to collect taxes (under a system called mālikāne dīvānī). They similarly preserved the preconquest taxes and tax-collection rights in other regions and made concessions to some tribes or recognized their semi-autonomous status with respect to taxation. The objective in these compromises and concessions was not to minimize transaction costs or to maximize the tax revenue, but to establish the Ottoman rule within the institutional constraints of conquest politics. Any attempt to understand the postconquest tax systems of these regions would thus have to examine the rigidities created by the relative powers and interests of established political groups.
The second source of rigidity was the general population of taxpayers. Opposition to taxes has been one of the most common reasons for popular uprisings in history.33 Taxpayers naturally resist higher taxes, and they prefer stable, secure incomes. This type of resistance may also have been most evident during conquests. Unless changing taxes would have clearly eliminated excessively oppressive elements of the previous tax system (as may have been the case for labor services), the general population would have been likely to prefer status quo over
25
change, for fear that change might mean higher taxes and worse conditions. And they could have even fled the land or revolted against the new regime if the changes were perceived to be too burdensome. Even if an existing tax system was known to be inefficient, therefore, the Ottomans had to carefully weigh their desire to change the system against the possibility of political instability. An inefficient tax system could have thus survived if political rigidities prevented a ruler from changing it.
Given the political realities surrounding conquest, assimilation, and stability, the Ottomans were not free to change the tax codes as they wished. Even if they could have increased the tax revenues in Hungary by changing personal taxes from being based on the household as a whole to a differential rate structure based on the characteristics of its individual members, they would have met stiff resistance from those who would have paid higher taxes. Because of this resistance, they could not have implemented the change easily. They similarly could not have easily changed the rate structure of output taxes in the Fertile Crescent from discriminatory rates to a uniform rate, because this would have meant higher rates for some villages. Political obstacles existed not just in newly conquered lands but in well assimilated regions as well. Once the tax code of a region was adopted, changing it would have been difficult because the general population accustomed to paying taxes under a familiar system and powerful groups with vested interests in this system would have continued to resist the change.
There were various other forms of institutional rigidities against changing taxes. Units of measurement varied significantly between regions, making it difficult to standardize the bases and rates of taxes across the Empire. Social and demographic institutions may also have contributed to regional diversity. The size and structure of families and households, for example, may have varied between regions or between ethnic and religious groups, making it difficult to
26
implement one region’s personal tax system in another region, even though one may have been more efficient or equitable than the other. Even the lingual diversity may have been an obstacle to change. There were numerous types of scripts and languages within the Empire, setting barriers to transplanting components of a region’s tax system onto another. Even if the tax systems of some regions may have contained inefficient or inequitable elements, institutional rigidities may have guarded their survival.
CONCLUSION
New Institutional Economics provides rich tools and concepts that allow us to go beyond the previously narrow frameworks of economic and historical approaches to the study of Ottoman taxation. Whereas economic historians have conventionally studied Ottoman taxes from a narrow historical perspective by simply identifying elements of continuity with the precedent, this paper has also identified the properties of these elements that explain why their continuity was desirable. Integrating economic and historical perspectives for a more complete approach, it has examined the structure, efficiency, and regional diversity of Ottoman taxes.
The general structure of taxes made it possible for the Ottomans to economize on the cost of measuring the tax base. Personal taxes were based not on unobservable income or productivity but on observable characteristics like marital status and land ownership. The choice of a base for production taxes similarly depended on how the cost of measurement varied among bases. Taxes on some products like grains were levied on the output because the tax collectors could easily measure the harvested output. Taxes on other products like fruits and vegetables, on the other hand, were levied not on the output but on one of the inputs used in production because it was cheaper to measure the amount of this input than the total output. The system of applying
27
different types of bases to productive activities allowed the Ottomans to minimize the transaction cost of taxation. The same was true for trade taxes.
Although identifying desirable properties may be sufficient to explain some of the regional differences in taxes within the Empire, it fails to explain others. Some of the regional variations in the methods and rates of taxation can be viewed as efficient adaptations of the system to the local conditions of production technology or the changing needs of public expenditures. Other variations, however, were outcomes of not adaptation but institutional rigidity. They reflected the way previous practices were molded into the Ottoman system of taxation within various political, social, and other types of institutional constraints. In drafting the tax code of a newly conquered region the Ottomans had to carefully consider the prevailing local practices and rates of taxation, maintaining a delicate balance between efficient taxation and political assimilation. Competitive forces toward efficient taxation must have continually clashed with institutional obstacles against change throughout the Empire, requiring that we integrate economic analysis of the efficiency of Ottoman taxes and historical studies of their continuity.
28
TABLE 1
EXAMPLES OF TAX RATES IN OTTOMAN DISTRICTS
PERSONAL TAXES
TRADE TAXES
PRODUCTION TAXES
Input taxes
Output taxes
District (Year)
Resm-i Çift (Yoke Tax)
Resm-i Mücerred (Bachelor Tax)
Resm-i Kapı (Gate Tax)
Goods Brought to Market
Beehives
Animals
Vineyards
Tax Rate
Antep (1574)
40
6
1 per camel-load of miscellaneous goods
2 per beehive
0.5 per animal
0.02 per vine
1 / 8
Budapest (1562)
50
4 per wagon-load of pots and cups
0.5 per animal
4 per dönüm
1 / 10
Erbil (1542)
50
6
10 per load of butter and honey
2 per beehive
0.5 per animal
Bursa (1487)
33
9 or 12
1 or 2 per beehive
0.5 per animal
3, 5, or 10 per dönüm
1 / 10
Jerusalem (1562)
20 per camel-load of linen
1 per beehive
0.5 per animal
0.1 per vine
variable between 1/7 and 2/5
Malatya (1560)
50
6
1 per beehive
0.5 per animal
0.03 per vine
1 / 5
Notes: All monetary values are in the Ottoman currency of Akçe. Dönüm is a measure of land. See the text for the definitions of personal tax items. Some figures are missing either because the tax code did not specify the rate for those items or because the description was too detailed and
29
complex to be summarized in a single entry. Because of the customized nature of lumpsum taxes, their rates are not reported.
Sources: Akgündüz, Osmanlı Kanunnâmeleri and Barkan, Kanunlar.
30
TABLE 2
THE PERCENTAGE SHARES OF OTTOMAN TAX CATEGORIES
PRODUCTION TAXES
DISTRICT
YEAR
PERSONAL TAXES
TRADE TAXES
Output
Input
Enterprise
Antep
1536
12
10
26
47
6
Antep
1543
9
4
54
31
3
Antep
1574
10
3
47
33
6
Budapest
1546
23
30
35
4
7
Budapest
1562
23
18
42
9
9
Erbil
1542
7
2
70
10
11
Malatya
1560
17
5
53
17
7
Mardin
1564
21
8
51
6
14
Jerusalem
1596
0
2
69
23
6
Sources: Ottoman Tapu Tahrir Defterleri (numbered 161, 186, 345, 373, 388, 406, 410, and 449 in the Prime Ministry Archives in Istanbul and 69, 72, 97, 100, 112, 117, 142, 181, 185, and 192 in the Cadastral Office in Ankara); contents published by Hüseyin Özdeğer, Onaltıncı Asırda Ayıntab Livası. (Istanbul, 1988); Gyula Káldy-Nagy, Kanuni Devri Budin Tahrir Defteri (1546-1562). (Ankara: Ankara Üniversitesi Dil Tarih-Coğrafya Fakültesi Yayınları, 1971); Mehdi İlhan,. “Erbil Vilayeti Mufassal ve Mücmel Tahrir Defteri (H. 949/M. 1542).” Belgeler 31
26(1994-95); Rafet Yinanç and Mesut Elibüyük, Kanuni Devri Malatya Tahrir Defteri (1560). (Ankara, 1983); Nejat Göyünç and Wolf-Dieter Hütteroth, Land an der Grenze. (Istanbul: Eren Yayıncılık, 1997); and Wolf-Dieter Hütteroth and Kamal Abdalfattah, Historical Geography of Palestine, Transjordan and Southern Syria in the Late 16th Century. Erlanger Geographische Arbeiten, Vol. 5. (Erlangen, 1977).
32
NOTES
Author’s note: I gratefully acknowledge financial support of the National Science Foundation (under Grant No. SES - 0433358) and the University of Connecticut Research Foundation. I also wish to thank Dhammika Dharmapala, Thomas Miceli, reviewers for this Journal, and the participants at the 2002 Annual Cliometrics Conference in La Crosse, WI and the 2003 Iowa Alumni Workshop in Iowa City, IA for helpful comments and suggestions. Ali Özdemir, Sadık Yıldırım, and Hüseyin Yılmaz provided valuable research assistance.
1 Halil İnalcık [with Donald Quataert], An Economic and Social History of the Ottoman Empire, 1300-1914. 2 vols. (New York: Cambridge University Press, 1994), 1: 105. For the relationship between the Byzantine, Balkan, Islamic, and Ottoman taxation, see Ömer Lütfi Barkan, “Türkiye’de Toprak Meselesinin Tarihi Esasları,” Ülkü Halkevleri Dergisi 60 (1938): 51-63, 63: 233-40, 64: 339-46 ; Michael Boyd, "The Evolution of Agrarian Institutions: The Case of Medieval and Ottoman Serbia," Explorations in Economic History 28(1991): 36-53; Halil İnalcık, “The Problem of the Relationship between Byzantine and Ottoman Taxation,” Akten des XI. Internationalen Byzantinisten-Kongresses 1958 (Munich, 1960), 237-42; İnalcık, An Economic and Social History. 70, 149-53; Bernard Lewis, “Ottoman Land Tenure and Taxation in Syria,” Studia Islamica 50(1979): 109-24.
2 Douglass C. North, Institutions, Institutional Change and Economic Performance. (Cambridge: Cambridge University Press, 1990), 7. For other examples and discussion, see Alexander J. Field, “The Problem with Neoclassical Institutional Economics: A Critique with Special Reference to the North/Thomas Model of Pre-1500 Europe,” Explorations in Economic History 33
18(1981): 174-98; Kaushik Basu, Eric Jones, and Ekkehart Schlicht, “The Growth and Decay of Custom: The Role of New Institutional Economics in History," Explorations in Economic History 24(1987): 1-21.
3 See, for example, Timur Kuran, “Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation,” Journal of Economic Perspectives 18(2004): 71-90; Avner Greif, "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," The Journal of Political Economy 102(1994): 912-50.
4 Halil İnalcık, “Ottoman Methods of Conquest,” Studia Islamica 2(1954): 103-130; İnalcık, An Economic and Social History. Chapter 5; Douglas A. Howard, “The Historical Development of the Ottoman Imperial Registry (Defter-i Hakanî): Mid-fifteenth to Mid-seventeenth Centuries,” Archivum Ottomanicum 11(1986): 213-30; Metin M. Coşgel, “Ottoman Tax Registers (Tahrir Defterleri),” Historical Methods 37(2004): 87-100.
5 For the history and types of Ottoman tax codes, see Halil İnalcık, “Kânūnnâme,” Encyclopedia of Islam, Second Edition, 1960; Douglas A. Howard, “Historical Scholarship and the Classical Ottoman Kanunnames,” Archivum Ottomanicum 14(1995/96): 79-107. For collections of tax codes, see Barkan, XV ve XVI. Asırlarda Osmanlı İmparatorluğunda Zirai Ekonominin Hukuki ve Mali Esasları. Cilt 1: Kanunlar. (Istanbul: Burhaneddin Matbaası, 1943); Ahmed Akgündüz, Osmanlı Kanunnâmeleri ve Hukukî Tahlilleri. (Istanbul: Osmanlı Araştırmaları Vakfı, 1990).
34
6 Neşet Çağatay, “Osmanlı İmparatorluğunda Reayadan Alınan Vergi ve Resimler,” AÜDTCFD 5(1947): 483-511.
7 İnalcık, An Economic and Social History, 55-75.
8 For example, starting with this distinction, Ziya Kazıcı examines Ottoman taxes belonging in the Islamic category. See, Kazıcı, Osmanlılarda Vergi Sistemi. (Istanbul: Şamil Yayınevi, 1977). For examples of problems related to the distinction, see İnalcık, An Economic and Social History, 72-74; Lewis, “Ottoman Land Tenure and Taxation,” 119-20. For a study of Ottoman finance procedures, Linda Darling finds it more useful to classify taxes according to the recipient of the tax revenue. See, Linda Darling, Revenue-Raising and Legitimacy: Tax Collection and Finance Administration in the Ottoman Empire, 1560-1660. (NY: E.J. Brill, 1996). Because of our focus on the generation or tax revenue, issues related to their distribution are omitted here. For a study of how transaction costs affected the distribution of Ottoman tax revenues, see Metin M. Coşgel and Thomas J. Miceli, “Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire,” Journal of Economic History. forthcoming. For an economic analysis of Ottoman taxes in the nineteenth century, see Süleyman Sūdī, Osmanlı Vergi Düzeni [Defter-i Muktesid] (Isparta, 1996).
9 İnalcık’s seminal study of Ottoman personal taxes, on the other hand, was successful precisely because it considered the personal tax system as a whole and provided the broad categories of its framework. See, İnalcık, “Osmanlılarda Raiyyet Rüsumu,“ Belleten 23(1959): 575-610.
35
10 Extraordinary levies to the state called avarız-ı divaniyye are also omitted because of their irregular nature during the fifteenth and sixteenth centuries. For Ottoman state revenues, see İnalcık, An Economic and Social History, 55-76. For revenues as fees and fines from marriages and misdemeanors, see Amy Singer, “Marriages and Misdemeanors: A Record of resm-i ‘arūs ve bād-i havā,” Princeton Papers in Near Eastern Studies 4(1996): 113-52.
11 For a detailed account and the historical origins of personal taxes, see İnalcık, “Osmanlılarda Raiyyet Rüsumu”.
12 Because the amount of land also affected these taxes, İnalcık insists that “[t]his was actually a system assessing peasants’ labor and land in combination.” See, İnalcık, An Economic and Social History, 149. That the tax rates also depended on one’s age and marital status, however, suggests that the taxpayer himself was the broader tax base. Although those who owned land paid at a higher rate, even landless subjects were responsible for paying the personal tax.
13 For the complete tax codes of these and other districts, see Akgündüz, Osmanlı Kanunnâmeleri and Barkan, Kanunlar.
14 For urban taxes and activities in Anatolia, see Suraiya Faroqhi, “Taxation and Urban Activities in Sixteenth-Century Anatolia,” International Journal of Turkish Studies 1(1979-80): 19-53.
15 These figures have been calculated from the tax information on towns and villages. The information recorded for other potential sources of revenue, such as ruined mills or uninhabited lands, are omitted in order to keep figures comparable across districts.
36
16 The issue for taxes is analogous to the problem of choosing among the rich variety of contractual forms observed in history. For the contractual mix in agriculture in the American south since the Civil War, for example, see Lee J. Alston and Robert Higgs, “Contractual Mix in Southern Agriculture since the Civil War: Facts, Hypotheses, and Tests,” Journal of Economic History 42(1982): 327-53. For medieval contracts, see Coşgel, “Risk Sharing in Medieval Agriculture,” Journal of European Economic History 21(1992): 99-110. For reviews of the relevant literature, see Douglas W. Allen, “Cropshare Contracts,” in Peter Newman, ed. The New Palgrave Dictionary of Economics and the Law. (New York: Stockton Press, 1998); and Keijiro Otsuka , Hiroyuki Chuma, and Yujiro Hayami, “Land and Labor Contracts in Agrarian Economies: Theories and Facts,” Journal of Economic Literature 30(1992): 1965-2018.
17 Eliyahu Ashtor, A Social and Economic History af the Near East in The Middle Ages. (Berkeley: University of California Press, 1976), 40. In fact, long before economists justified cropsharing contracts and output taxes on risk-sharing grounds, the Muslim scholar Abū Yūsuf had argued in favor of output taxes because input taxes (the misā􀂭a method) posed greater price risks. For a discussion, see Frede Løkkegaard, Islamic Taxation in the Classic Period, with Special Reference to Circumstances in Iraq. (Copenhagen: Branner and Korch, 1950), 114.
18 For the different species of food plants, see Robert W. Schery, Plants for Man. (Englewood Cliffs, N.J.: Prentice-Hall, 1972). See also, for examples of crop production and field-crop ecosystems in this region, Itzhak Arnon, Agriculture in Dry Lands: Principles and Practice. (NY: Elsevier, 1992); C. J. Pearson, ed. Field Crop Systems. Ecosystems of the World. Vol 18. (New York: Elsevier, 1992), chapter 14.
37
19 One may also propose an incentive based explanation of production taxes, based on the taxpayer’s incentives to utilize resources efficiently under different categories of taxes and the possibility of misaligned incentives between the state and the taxpayers. But the incentive based argument does not fit the evidence well either. Although the state legally owned the land and retained the eminent domain, the possession and usufruct rights belonged to farmers. The taxpayers’ interests in using the land (or trees, animals, and other natural resources) were thus aligned with those of the state.
20 For the importance of measurement costs in determining cropsharing contracts in modern agriculture, see Douglas W. Allen and Dean Lueck, “Contract Choice in Modern Agriculture: Cash Rent versus Cropshare,” Journal of Law and Economics 35(1992): 397-426. For the general importance of measurement cost for the organization of markets, see Yoram Barzel, “Measurement Cost and the Organization of Markets,” The Journal of Law and Economics 25(1982): 27-48.
21 Court records show frequent disputes arising from the division of harvest, which support the importance of measurement costs for division. For harvest related disputes in the Jerusalem court records, see Amy Singer, Palestinian Peasants and Ottoman Officials: Rural Administration around Sixteenth-Century Jerusalem. (New York: Cambridge University Press, 1994), 90-99.
22 For the relationship between the harvest and tax collection schedules in the Aleppo region, see Margaret L. Venzke, The Sixteenth-Century Ottoman Sanjaq of Aleppo: A Study of Provincial Taxation. Ph.D. Dissertation, Columbia University, 1981, 135-39.
23 For evidence of increasing cost of measurement in distant villages, see Metin Kunt, The Sultan’s Servants. (New York: Columbia University Press, 1983), 19.
38
24 For Islamic taxation, see Løkkegaard, Islamic Taxation; A.K.S. Lambton, “Kharādj,” Encyclopaedia of Islam. Second Edition. Leiden, 1962. See also, for Islamic law on land taxes, . Baber Johansen, The Islamic Law on Land Tax and Rent. (New York: Croom Helm, 1988).
25 For the commonalities between the Byzantine and Ottoman taxes, see İnalcık, “The Problem of the Relationship”; İnalcık, An Economic and Social History, 149-53; and Anthony Bryer and Heath Lowry, eds., Continuity and Change in Late Byzantine and Early Ottoman Society. Papers Given at a Symposium at Dumbarton Oaks in May 1982. (Washington, D.C.:Dumbarton Oaks Research Library and Collection, 1986). For the tax systems of other contemporary Islamic states, the Safavid and Mughal Empires, see also Shireen Moosvi, The Economy of the Mughal Empire c. 1595, A Statistical Study. (Delhi: Oxford University Press, 1987); Willem Floor, A Fiscal Study of Iran in the Safavid and Qajar Periods, 1500-1925. (New York: Bibliotheca Persica Press, 1998).
26 İnalcık, An Economic and Social History, 112-14.
27 For a quantitative analysis of the efficiency and redistributive properties of the variable tax rates in this region, see Coşgel, “Taxes, Efficiency, and Redistribution: Discriminatory Taxation of Villages in Ottoman Palestine, Southern Syria, and Transjordan in the Sixteenth Century,” Explorations in Economic History. forthcoming.
28 Ibid.
29 For analyses of the principles for the distribution of tax revenues in the Ottoman Empire, see Kunt, Sultan’s Servants; and Coşgel and Miceli, “Risk, Transaction Costs, and Tax Assignment”.
39
30 Kuran, “Why the Middle East is Economically Underdeveloped”.
31 Halil İnalcık, “Suleiman the Lawgiver and Ottoman Law,” Archivum Ottomanicum 1(1969): 108-11)
32 For Ottoman methods of conquest and assimilation, see İnalcık, “Ottoman Methods”.
33 David F Burg, A World History of Tax Rebellions: An Encyclopedia of Tax Rebels, Revolts, and Riots from Antiquity to the Present. (New York: Routledge, 2003).
40

Taxes, Efficiency, and Redistribution

Department of Economics Working Paper Series
Taxes, Efficiency, and Redistribution: Discriminatory Taxation
of Villages in Ottoman Palestine, Southern Syria and Transjordan
in the Sixteenth Century
Metin Cosgel
University of Connecticut
Working Paper 2002-22
October 2002
341 Mansfield Road, Unit 1063
Storrs, CT 06269–1063
Phone: (860) 486–3022
Fax: (860) 486–4463
http://www.econ.uconn.edu/
Abstract
Governments can tax productive activities with either uniform or discriminatory
rates among taxpayers. Although discriminatory rates can cause productive
inefficiency and require high cost of administration, they can be preferred because
of their advantage in distributional flexibility. This paper studies the discriminatory
taxation of production in the Fertile Crescent. Using information from the
Ottoman tax registers, it examines the basis, distortionary effects, and distributional
consequences of discriminatory rates quantitatively. The results challenge
widely held beliefs about the basis for discriminatory rates in this region and the
Ottoman government’s motivation in adapting systems of taxation in newly conquered
lands.
I wish to thank the participants at the Economic History and Development
Workshop at UMass, Amherst; the 2002 Annual Cliometrics Conference in La
Crosse, WI; the 2002 Economic History Association Meetings in St. Louis, MO,
and the 2003 Iowa Alumni Workshop in Iowa City, IA for helpful comments and
suggestions. Ali Ozdemir, Hesna Taskimir, and Sadik Yildirim provided valuable
research assistance.
1
Taxes, Efficiency, and Redistribution:
Discriminatory Taxation of Villages in Ottoman Palestine, Southern
Syria, and Transjordan in the Sixteenth Century
ABSTRACT: Governments can tax productive activities with either uniform or discriminatory
rates among taxpayers. Although discriminatory rates can cause productive inefficiency and
require high cost of administration, they can be preferred because of their advantage in
distributional flexibility. This paper studies the discriminatory taxation of production in the
Fertile Crescent. Using information from the Ottoman tax registers, it examines the basis,
distortionary effects, and distributional consequences of discriminatory rates quantitatively. The
results challenge widely held beliefs about the basis for discriminatory rates in this region and
the Ottoman government’s motivation in adapting systems of taxation in newly conquered lands.
A fundamental question governments face in taxing productive activities is whether the
rates should be uniform or discriminatory among taxpayers. Whereas under a uniform rate
structure the same rate would apply to all taxpayers, discriminatory rates would vary among
taxpayers based on their abilities, socio-economic status, what they do, or how much they earn.
Although uniform rates are simpler and cheaper to administer, discriminatory rates may also be
observed in a variety of contexts, primarily because of their advantage in distributional
flexibility. By varying rates among taxpayers, governments are able to redistribute income
between the sectors and regions of the economy or between political, demographic, or income
groups. Discriminatory rates induce inefficiencies, however, because they cause the after-tax
cost of production or input provision to be greater for some taxpayers than others. In deciding
2
whether the rates should be uniform or discriminatory, governments have to balance the loss in
efficiency against the social value of redistributing income through the system of taxation.
The cost of administering a system with discriminatory rates can be very high when the
characteristics of taxpayers do not differ systematically or when these differences cannot be
easily observed. It is generally easier to identify differences between the sectors of the economy
than within each sector, making it harder to implement discriminatory rates within a sector.
Although rates have historically varied between the agricultural and manufacturing or between
the market and non-market sectors, they have been more uniform among producers within each
of these sectors. In most medieval and early modern systems of taxation, for example, although
manufacturing and trade activities may have been taxed at different rates than agricultural
activities, all agricultural producers typically paid taxes at the same rate, usually as tithes.
The system of discriminatory taxation that prevailed in parts of the Fertile Crescent until
the nineteenth century stands out as a novel phenomenon in the history of taxation. Although the
origins of the system are unknown, it was widely practiced at the time of the Ottoman conquest,
possibly much earlier in history. When the Ottomans conquered this region in the early sixteenth
century, they inherited a system of agricultural taxation with discriminatory rates among villages.
Whereas in other parts of the Empire taxes on grains were levied at uniform rates (usually onetenth)
among villages, the rates in the newly conquered lands varied between one-seventh to
two-fifths of output. Despite the contrast between the two systems, the Ottomans preserved the
prevailing system of taxation in these lands and simply reassigned the tax revenues to
themselves.
This paper seeks to understand the nature and consequences of discriminatory taxation in
this region, examining it quantitatively within the relevant theoretical and historical context.
3
Three objectives guide the inquiry. The first is to examine the basis for discriminatory rates.
Although historians have generally argued that the rates depended on local factors like the
fertility of the soil and the availability of irrigation facilities, no satisfactory quantitative
evidence has been found for support. I use the Ottoman tax registers as primary sources of data,
which include information about over 1,300 villages in seven Ottoman districts corresponding to
Palestine, southern Syria, and Transjordan in 1595-96 (H"tteroth and Abdulfattah, 1977). I also
use maps of the region to construct measures of some of the physical characteristics, such as the
availability of irrigation water, of each village. Although a regression analyses shows various
variables that affected the tax rates significantly, the effects of some of the variables were not in
expected directions. Framing previous arguments into a coherent whole, I discuss their relative
merits.
The second objective is to determine the distortionary effects of discriminatory taxation.
Whereas the tax rates varied among villages for some products like grains, they were uniform for
other products like fruits and vegetables. By determining the relationship between the tax rates
and the outputs of these two types of products, we can determine the distortion caused by
discriminatory taxation. Economic theory of taxation has shown how taxes raise the after-tax
cost of a product and cause producers to inefficiently shift resources toward other products. All
else being the same, the magnitude of this distortion would rise with the rate of taxation. The
implication for a discriminatory rate structure is that, assuming substitutability between products
to be the same among villages, a village with a higher rate of taxation than another would be
expected to substitute a greater amount of the discriminatorily taxed product for other products.
Taxation theory would thus lead us to expect a negative relationship between the tax rates and
4
the output of a discriminatorily taxed product and a positive relationship with the outputs of
other products. Using data from the tax registers, I find that the results confirm the expectation.
The final objective is to examine the effect of discriminatory rates on income distribution.
To compare income distribution under discriminatory and uniform rates, I first determine the
existing distribution of income among villages at different points of the distribution and calculate
the income shares of the villages in each group. I then use the regression results of the
relationship between the tax rates and output to simulate what the incomes would have been
under a uniform rate structure. Comparing the distribution of income under the two rate
structures, I examine whether discriminatory rates improved or worsened income distribution.
The results challenge widely held beliefs about the Ottoman government’s motivation in
adapting systems of taxation in newly conquered lands.
DISCRIMINATORY RATES IN THEORETICAL AND HISTORICAL CONTEXT
The basic elements of a tax system are the tax base and the rate structure. Governments
have various choices in levying taxes on a productive activity, such as to impose a lump-sum
payment on the firm or to make taxes based on the revenue or profits earned from the activity or
on the returns to one or more of the inputs used in production. Corresponding to each tax base,
there is also the choice of whether the rates should be uniform or discriminatory among
taxpayers. The rates in discriminatory taxation may vary according to various criteria, including
geographic location (rural versus urban, developed versus backward), product category (farming
versus industrial, consumer versus capital goods), or personal characteristics (age, marital
status). Because tax collection is coercive, the choice of tax base and rate structure can have
important implications for various political and economic outcomes in a society, including the
allocation of resources and the distribution of income.
5
Uniform and discriminatory rates have significant implications for equity and efficiency
in taxation.1 By altering the relative costs of economic activities, all (non-lump-sum) taxes affect
behavior and cause inefficiencies as taxpayers naturally adjust to taxes by substituting other
activities for taxed ones. Although both uniform and discriminatory rates thus cause distortions,
economic inefficiencies are likely to be greater with discriminatory rates than with uniform rates.
Some inefficiencies are distinct outcomes of discriminatory taxation. For example,
discriminatory rates create opportunities for rent-seeking (as each group seeks to reduce its own
rate) and raise the cost of administration and compliance (given the asymmetric information
about taxpayers and their incentives to avoid taxation).2
Moreover, discriminatory rates among taxpayers cause not only allocative but also
productive inefficiencies.3 One of the requirements of production efficiency is for the marginal
rate of transformation between any two outputs to be the same in all producers, which can be
achieved when all producers face the same prices for outputs. Although a tax on an output that is
uniform across producers would not affect this condition, discriminatory rates would cause
producers to face different prices and cause the economy to be productively inefficient.
To compare the distortionary effects of uniform and discriminatory taxation in a simple
example, consider an economy with two groups of producers producing two goods, A and B.
Suppose that this economy is initially producing efficient quantities of A and B and that the
government decides to raise revenue by taxing A. Taxing this product at a uniform rate between
1 For the classical article on the efficiency of differential commodity taxes, see Ramsey (1927).
Despite some parallels, however, the problem is quite different with rates that differ among
commodities than with those that differ among taxpayers. For general reviews of efficiency and
equity in taxation, see Slemrod (1990) and Stiglitz (1999).
2 For a general analysis of public choice issues in taxation, see Holcombe (1998).
3 Diamond and Mirrlees (1971) analyze conditions for production efficiency in taxation in a
general framework.
6
the two groups would result in a deadweight loss by raising the price of A and causing an
inefficiently large production of B. Despite the loss in welfare, however, the economy can still
be productively efficient (on the production possibilities frontier) because all producers would
face the same prices. Raising the same tax revenue with discriminatory rates, on the other hand,
would result in not only a deadweight loss but also a loss in production efficiency. For the tax
revenue to be the same under the two rate regimes, the discriminatory rate has to be higher than
the uniform rate for one of the groups and lower than the uniform rate for the other group.
Because the tax rates are now different between the two groups, they face different costs and
produce the two goods at different marginal rates of transformation. The economy is no longer
productively efficient. Assuming supply elasticities to be the same between the two groups, the
high rate group would be producing too little A and the low rate group too little B, compared to
productively efficient levels. Aggregate output can be increased by diverting resources from B
to A in one group and from A to B in the other until the marginal rates of transformation are
equalized.
Are the inefficiencies of discriminatory taxation justified? Governments engage in
discriminatory taxation primarily for income redistribution.4 A variety of factors can affect the
choice of a rate structure, including the magnitude of inefficiencies, the nature of pre-tax
inequalities, and the balance of power between various social and political groups. These, in
turn, would be determined by such things as production technology, natural resources and their
4 If taxpayers’ supply elasticities differ systematically among producers, discriminatory taxation
can also help to maximize tax revenue by assigning higher rates to producers with lower
elasticity. See Ramsey (1927) for a parallel argument in differential taxation of commodities.
Because of my focus on income redistribution and the difficulty of determining supply
elasticities, I ignore the way discriminatory rates may also have affected state’s tax revenue.
7
allocation in the population, the availability of skilled staff to administer taxes, and a society’s
history of taxation.
Although discriminatory taxation was observed in the fiscal history of the Fertile
Crescent, the details of the system before the Ottoman period are not known. A basic component
of the tax systems observed in the region was the proportional taxation of some products, known
in Islamic taxation theory as the muq#sama (sharing) method.5 Although the muq#sama method
was not practiced uniformly throughout the region or continually over time, historical records
show that it extended far back into Islamic history, possibly even to the pre-Islamic period.
Discriminatory rates were an integral part of the method in some regions. Based on their
interpretation of the Islamic Law, Muslim jurists generally agreed that the rates of taxation could
vary among villages, and secondary sources indicate that some rulers collected taxes on grains
like wheat and barley at rates that varied among villages between one-twentieth to one-half of
total output. The lack of detailed and reliable data, however, makes it impossible to determine
with certainty how widespread was the system of discriminatory taxation during the time of the
early Islamic empires, what exactly were the rates in each village, and how the system changed
over time until the Ottoman rule.
Thanks to the rich information recorded and preserved by the Ottomans, it is possible to
analyze the details of discriminatory taxation in this region during their reign. Upon conquering
new lands, the Ottomans typically conducted a cadastral survey and recorded information about
tax-paying subjects and taxable resources in tax registers, updated periodically as circumstances
5 That the Abbasid caliph al-Mahdi (CE 775-85) reintroduced the method upon request by the
peasantry indicates that it existed before his reign, possibly much earlier in history. For Islamic
taxation methods, see L$kkegaard (1950). See also Johansen (1988) for Islamic law on land
taxes. For the historical background to agricultural taxation in the region, see also Lambton
8
changed over time, in order to have current information on the empire’s sources of revenue.6 At
the beginning of each tax register was the tax code of a region, which laid down the basic tax
regulations and specified the rates corresponding to different circumstances.7
The tax codes of some of the districts in the Fertile Crescent make it clear that the
Ottomans inherited a discriminatory rate structure from previous rulers and that this differed
from the system of taxation in other regions. The tax code of the district of Quds (Jerusalem),
for example, begins: “In this district, because the tax rate of each village is different, the rate is
recorded separately.”8 The tax registers of this and several neighboring districts indeed recorded
the tax rate for each village separately, in addition to the detailed information about the taxpayers
and the expected revenues from a variety of productive activities in each village. The wealth of
information that these registers provide make it possible to study the nature, causes, and
consequences of discriminatory rates in this region in great detail.
By studying the tax codes of various Ottoman districts, we can determine the general
structure of their fiscal system. There were three general categories of Ottoman taxes: personal
taxes that were based on a taxpayer’s characteristics like land ownership and marital status, trade
taxes based on the market exchange of goods and services, and production taxes that applied to
(1962), Lewis (1979: 112-14), and Poliak (1977: 65-66). Venzke (1997) studies tax rates and
agricultural productivity in Aleppo.
6 These registers were called defter-i h#kan% [imperial register], commonly known as the tahrir
defterleri (s. defter). For details, see Co!gel (2003), &nalc'k (1954), and &nalc'k (1994: Chapter
5). For the registers of the Arab lands, see Lewis (1951) and H"tteroth and Abdulfattah (1977:
1-11). See also Kark (1997) for a history of cadastral surveys of Palestine and Singer (1990a;
1990b) for research possibilities based on the Ottoman registers of this region.
7 The tax code of each province or district was called k#n(nn#me. See &nalc'k (1960) for the
history and types of k#n(nn#mes. For collections of Ottoman k#n(nn#mes, see Barkan (1943)
and Akg"nd"z (1990). For similarities and differences between the tax systems of the Ottomans
and other contemporary Islamic states, see Floor (1998) and Moosvi (1987).
8 See Singer (1994: 48-49) for an English translation of the Quds tax code.
9
various farming and manufacturing activities.9 Production taxes consisted of three subcategories
depending on the tax base: output taxes that were based on the total output of an activity, input
taxes that were based on one of the inputs used in production, and enterprise taxes based on the
activity as a whole. Output taxes applied primarily to grains, legumes, and fibers, and they were
assessed as a share of the total output. Input taxes typically depended on the quantities of the
land, trees, animals, or other inputs used in production, rather than on total output. For example,
taxes on fruits, nuts, and dates depended on the number (sometimes also the age, height, and
type) of trees. Taxes on vineyards similarly depended on the number of vines, taxes on
vegetables depended on the amount of land allocated to them, and taxes on animal products
depended on the numbers of beehives or animals. Enterprise taxes depended not on the amounts
of the total output or one of the inputs used in production but on the activity as a whole.
Table 1 shows examples of tax instruments and rates in representative districts of the
Ottoman Empire during the sixteenth century.10 Differences among districts in tax rates and
bases reflect regional economic conditions and also the way pre-Ottoman customs were adapted
into the Ottomans system of taxation. Because personal taxes often had origins in wellestablished
feudal obligations that prevailed in areas conquered by the Ottomans, the names and
9 Although the Ottoman budgets included other sources of revenue, such as the tributes from
vassal states, profits from government owned enterprises, and revenues from various fees and
fines like the marriage fees and criminal fines, these revenues are excluded from discussion
because of our focus on the discriminatory taxation of productive activities. Extraordinary levies
to the state called avar'z-' divaniyye are also omitted because of their irregular nature during the
sixteenth century. For Ottoman state revenues, see &nalc'k (1994: Vol. 1, pp. 55-76).
10 These districts represent the geographical diversity of the Ottoman Empire. Quds is in eastern
Mediterranean, Budin is in eastern Europe, and Antep and Malatya are in eastern Anatolia.
Items of taxation were similarly chosen to represent regional similarities and differences in rates.
See Akg"nd"z (1990) and Barkan (1943) for the complete tax codes of these and other districts.
10
rates of these taxes could vary among regions.11 Whereas a married peasant in Anatolia who
held farm land workable by a pair ()ift) of oxen paid the )ift tax and a bachelor male paid the
lower bachelor tax, similar taxes in the European districts, such as the “gate-tax” observed in
Budin, were typically levied on the household as a whole. Personal taxes (other than the poll
taxes imposed on non-Muslims) did not even exist in the Quds district (and surrounding districts
as well). Trade and input taxes, on the other hand, were remarkably similar across districts,
reflecting the way the Ottomans were able to standardize the system as much as possible.
A comparison of the output tax rates across districts shows the distinct nature of
discriminatory taxation in Quds and surrounding regions. In other parts of the Ottoman Empire
the output tax rates were uniform across villages in a district. Although the uniform rate itself
could vary from one district to another, such as between the rate of 1/10 in Antep and 1/5 in
Malatya, it was the same rate that nevertheless applied uniformly to all villages within a district.
The rates in Quds and neighboring districts, however, varied significantly among villages.12
The absence of personal taxes in Quds provides a partial explanation for why output tax
rates were generally higher in this district than in others. It may seem to be an unfair burden for
villages to be taxed here at rates as high as forty percent while in other regions the rates were
only ten percent. The higher rates did not necessarily mean, however, that the total tax burden in
Quds was significantly higher, because there were other types of taxes to consider. Table 2
reports the relative shares of different tax categories in representative districts. Although the
higher output tax rates in Quds might have caused the proportion of output taxes to be higher
there than in other districts, the absence of personal taxes (other than the poll taxes imposed on
11 For a detailed account and historical origins of personal taxes, see &nalc'k (1959).
12 Despite the spatial variation, the rates remained remarkably stable over time. See Makovsky
(1984: 104) for the infrequent cases of changing tax rates in the Quds district.
11
non-Muslims) could have compensated for this. The sum of output and personal taxes in Budin,
for example, constitute about the same proportion of total taxes. Moreover, the level and
composition of both taxes and incomes from productive activities were influenced by a variety of
other regional production and market conditions, rendering comparisons of tax burden based
solely on output tax rates misleading.
Rate differences between and within districts continued until the nineteenth century,
when the Ottomans finally fixed these rates uniformly at one-tenth throughout the Empire. The
standardization of the rate was part of the European-inspired reform movement known as the
Tanz%m#t. 13 The reforms included the centralization and universalization of the tax system in the
same way that contemporary European states had recently sought to accomplish. Not everyone
has agreed, however, with the reformers’ contention that discriminatory rates were dysfunctional
and needed to be changed. *mer L"tfi Barkan, one of the leading economic historians of the
Empire in the twentieth century, criticized Tanz%m#t reformers for failing to understand the
redistributive benefits of discriminatory taxation (Barkan, 1964). Barkan and reformers could
both be right, of course, if discriminatory rates once had good basis that ceased to exist by the
nineteenth century. In any case, the question remains whether Barkan and others were right in
asserting that discriminatory rates served useful functions during the sixteenth century.
13 For attempts at making the rates uniform, see Lambton (1962: 1037). See also Barkan (1964)
for the history of muq#sama taxes (*!"r) in the Ottoman Empire and the variation of these rates
among districts.
12
THE BASIS FOR DISCRIMINATORY TAX RATES
Unfortunately, the tax registers did not specify the basis for the tax rates of villages, and
other contemporary sources did not provide direct testimony for what exactly caused the rates to
vary among villages. Writers in the secondary literature have typically presumed the rates to be
determined by factors that could cause the cost or revenue of productive activities to differ
systematically. Combined with information about farming conditions in the Fertile Crescent, this
presumption has led them to argue that the rates depended primarily on differences in
productivity and irrigation possibilities. Lewis (1979: 119), for example, argues that rates were
“determined by the quality and situation of the land, the availability of irrigation, and of course
the existing usage.” L$kkegaard (1950: 109-10) similarly states that in determining the rates,
“due regard [was] being paid to the facilities for irrigation and the cultivation of the soil.”14
It is well-known that the availability of irrigation water has had great importance for
agricultural production in this region because of its Mediterranean-type semi-arid climate, with a
regular pattern of some winter rains and an absolute summer drought.15 Differences in irrigation
possibilities could clearly affect the cost of farming, as villages with poorer access to irrigation
water were likely to spend more effort and incur higher cost than other villages in producing the
same amount of output. Similarly, differences in the productivity of land could affect the
revenue from farming, allowing farmers on more productive lands to generate higher incomes.
A redistributive system of taxation could in turn be based on these differences by assigning
higher rates to villages with more productive resources and/or easier access to irrigation water.
14 For similar arguments about the relationship between tax rates and productivity, see Ashtor
(1976: 40), Bakhit (1982: 148), Barkan (1964), and S(d% (1996: 40). For a detailed discussion of
the effect of irrigation possibilities on tax rates, see L$kkegaard (1950: 120-22.).
15 For the climate and water resources of the region, see Beaumont, Blake, and Wagstaff (1976:
Chapter 2) and FAO (1997). See also Arnon (1992) for agriculture in dry lands.
13
Although historians have generally shared the view of discriminatory rates as an
instrument of redistribution, they have not been able to confirm any of the presumed
relationships by quantitative analysis. For example, finding the argument about the relationship
between tax rates and productivity reasonable, H"tteroth and Abdulfattah (1977: 64-65) checked
it “very carefully in hundreds of cases,” but they found the results disappointing: “there is no
definite correlation between the [tax rate] and the agricultural productivity of the respective
village lands.” Similarly, based on a quantitative analyses of tax rates in Quds, Makovsky (1984:
102) argues: “Despite the likely general accuracy of the … hypotheses concerning the
progressive nature of [discriminatory] taxation, there seems to be no absolute standard by which
we can predict the taxation rate of a given village.”
These studies may have failed to find the determinants of tax rates not because of a
nonexistent relationship between tax rates and other variables but because of insufficient data or
inadequate methods of investigation. Although they do not state it explicitly, H"tteroth and
Abdulfattah (1977) seem to have reached their conclusion from a merely visual inspection of
hundreds of cases rather than systematic quantitative analyses. Because a variety of factors, in
addition to the productivity of land, were likely to influence tax rates at the same time, it is
impossible to control for all these factors and isolate the effect of productivity by mere visual
inspection. Despite being more detailed and quantitatively more sophisticated, Makovsky’s
(1984) analysis of the relationship between tax rates and population is also likely to fail for the
same reason. Because the effect of population, if any, on the tax rates is likely to be mixed with
many other factors, tabulating the population and tax rates of villages is unlikely to show their
relationship in isolation.
14
For a quantitative analysis of the determinants of tax rates, this paper uses data from the
tax registers of the Ottoman districts of Quds, N#bl(s, !azza, Lajj(n, +Ajl(n, "afad, and Hawran
for the year 1595-96 (1005 H.).16 To construct a complete and reliable data set for the study of
the determinants of tax rates, I omitted fiscal units that made a single lump-sum payment for
taxes (rather than itemized taxes) and those with missing information on inhabitants or taxes.17
Of the 1559 fiscal units (excluding uninhabited fields called mazra’as) reported by H"tteroth and
Abdulfattah (1977), 211 observations were thus dropped, and the remaining 1348 villages
constitute the observations in the data set.
Table 3 shows the distribution of the inhabitants of these villages and their taxes by tax
rates. About half of all villages in the area were taxed at the rate of one-fourth, the majority of
the rest being taxed at one-third of total output. Only 5 villages were taxed at rates below 20
percent. Taxed at the rate of one-seventh was the village of Sukr%r in !azza. Those taxed at the
rate of one-sixth were the villages of Dayr Shayh and Bayt S#h(r an-Na,#r# in Quds and the
villages of Majdal #rkam#s and Tall Kis#n in the subdistrict (n#-iya) of Akk# in the district of
"afad. Nuwayr%, a writer of the Mamluk period, emphasized security concerns, such as being
16 The registers are numbered TK 72, 100, 112, 181, 185, and 192 in the Cadastral Office
archives in Ankara. In addition to reporting the results of their pioneering study of the historical
geography of this region, H"tteroth and Abdulfattah’s (1977) transcribed, categorized, and made
available the data contained in these registers for other researchers. Social, economic, and
demographic studies of the region in the sixteenth century have relied heavily on these registers
as the primary sources of information. See, for example, Makovsky (1984), Rhode (1979), and
Singer (1994). For the registers of the Arab lands, see Lewis (1951) and H"tteroth and
Abdulfattah (1977: 1-11). See also Kark (1997) for a history of cadastral surveys of Palestine.
Bakhit and Hmoud (1989) also published a series of registers of the region corresponding to
today’s Jordan.
15
located on the seacoast or near the enemy border, as the primary reason for why the Mamluks
assigned such low rates of taxation.18 Although one of these villages, Sukr%r, was located near
the coast in the northwestern part of !azza, the other four villages did not have similar locations,
and there were many other villages along the coast with higher rates of taxation.19 There must
have been something distinct about these five villages, such as being in charge of the protection
of (or catering to) the pilgrims during the annual pilgrimage to Mecca or the maintenance of an
important road or bridge, which caused their tax rates to be exceptionally low.
For a regression analysis of the determinants of tax rates, I generated various independent
variables from the tax data. I also used available maps of this region to construct other variables
that represent physical characteristics of a village. The variables of primary interest are those
that have been identified in the literature as the most significant influences on the cost and
revenue of farming operations: irrigation possibilities and agricultural incomes. It is impossible
to find a direct measure of the availability of irrigation facilities in each village in the late
sixteenth century, simply because we have no localized information on irrigation methods (e.g.,
canals or underground water sources) from that period. Rather than a direct measure of irrigation
possibilities, proxy variables have to be used to represent the availability of irrigation water in a
17 In a few number of cases, I filled in the tax rates of surrounding villages for the missing rate of
a village to be able to retain available information on other variables.
18 Makovsky (1984: 102) also discusses the case of Q(fin in the Quds district as being taxed at
the rate of one-tenth. H"tteroth and Abdulfattah (1977) list the same village as being taxed at
one-third in their register. An error may have been made in deciphering, recording, or printing
this record.
19 Nuwayr% (1923-42) also mentioned the possibility of low rates for those villagers leasing
deserted lands. Although their status as being no longer inhabited in the late mandatory period
appears to suggest harsh climatic conditions for three of these villages, the same was true for
over 200 other villages whose past locations were also identified (about 750 villages were still
16
village. One possibility is to use recent maps of the region to approximate a village’s access to
surface sources of water (rivers, streams, lakes), assuming them to be unlikely to have changed
significantly.20 I thus identified each village’s location relative to surface sources of water and
generated a dummy variable for whether a village was within close proximity of water.21 There
are some obvious potential problems of using such a measure, such as omitting other sources of
water that were available to villages in the sixteenth century and including sources that were not
available. Given the current state of our knowledge of irrigation facilities in each of these
villages in the sixteenth century, however, this is the best that we can do.
On the revenue side, the relationship between the tax rates and agricultural incomes could
exist at two different levels: total for the whole village or average per household. Even though
the registers listed the heads of households separately and the tax system made them responsible
for taxes individually, the taxes were recorded as a single sum for the whole village, rather than
broken down or averaged out by households. Although the government could presumably use
this information to calculate simple averages, there is no evidence that this was done. One might
argue that, because the government did not have information about average incomes of
households, tax rates were determined by the total revenue of the whole village, all else being the
same. Discriminatory tax rates applied only to output taxes, so I included as an independent
inhabited in the late mandatory period, and no definite determination could be made for the
status of the remaining 500 or so villages recorded in the tax registers).
20 The assumption is consistent with the evidence on climatic changes and the evolution of land
use in the region. See Butzer(1961) and Whyte (1961) for details.
21 For the location of villages, I relied on the maps produced by H"tteroth and Abdulfattah
(1977). I also relied on their estimation of where a village could be located in cases when the
location could not be identified with certainty in current maps. In locating available sources of
water, I did not include underground sources because no reliable and detailed maps exist for their
location and depth. Similarly, I omitted artificial canals because most canals that are currently
used for irrigation in this region have been built recently.
17
variable the sum of the incomes from products subject to output taxes by multiplying the taxes
listed in the registers for these products by the taxation factor (inverse of the tax rate).
The relationship between income and tax rates could also exist at the level of average
incomes per household. That the government did not calculate taxes or incomes per household
may not necessarily imply that income differences among villages were not well-known or that
these differences did not influence the determination of tax rates. There may have been wellknown
differences in soil productivity among villages, which may have caused incomes per
household to differ systematically. The tax system could have used these differences as the basis
for discriminatory rates, for example by assigning higher rates to villages with higher incomes
per household. To consider this possibility, I calculated each village’s average income per
household from products subject to the output tax.
I included various other variables into the regression analysis to be able to control for
their effects on the tax rates. The religious composition of a village’s inhabitants could be a
factor if, for example, the relative power of the tax recipients over the villagers in influencing the
tax rates depended on the proportion of Muslims in the village. Although the religious minorities
(Jews and Christians) paid a poll tax called jizya in addition to regular agricultural taxes, they
could be paying even higher taxes through higher rates of taxation on their grain production as
well. To consider this possibility, I calculated the proportion of Muslims in a village’s
population (adult males) as another variable.
A village’s distance to the nearest market town could affect its tax rate. This could be the
case if being farther from market towns meant for a village to have a lower tax rate because of
fewer opportunities for alternative employment, higher cost of marketing products, or costlier
access to other urban benefits. To approximate these considerations, I measured the direct
18
distance between a village and the nearest market town as a variable. Although the relevant
distance could vary considerably from this measure because of such factors as the terrain or the
presence and conditions of the roads and waterways, we do not have information about these
factors in the sixteenth century.
The recipient(s) of a village’s tax revenue could also affect its rate of taxation. The
distribution of tax revenue could affect the rates if, for example, the recipients differed
systematically in their incentives to maximize the revenue. 22 To consider this possibility, I
grouped the recipients into three categories based on the way they collected and spent taxes. 23
The first is the central government, which collected taxes through its agents. Because the money
entered the treasury before being spent and thus those who collected the money were different
from those who spent it, the incentives to maximize the tax revenue were different. The
government’s tax collectors, who had the expertise and local knowledge, did not have full
incentives to try to maximize the tax revenue. The second category consists of all members of
22 The causality between the rates and recipients of taxes could also have gone in the other
direction, such as if recipients were determined based on the tax rates, which would be a case of
an endogenous relationship. Despite being an interesting possibility, this interdependence is
beyond the scope of this paper and is not investigated in detail.
23 Under the Classical Ottoman system of government finance, tax revenues were either retained
by the central treasury, awarded to various military, judicial, and administrative personnel as
remuneration for their services, or distributed to other groups or organizations as their rights
recognized by the system of land tenure. The revenue recipients recorded in the tax registers of
this region were the p#d%!#h (the ruler, central government), m%r liw# (provincial governor and
commander of troops), holders of t%m#r and za’#ma (small and large fiefs), waqfs (pious,
charitable foundations), and the holders of such rights as m"lk (private) land and haq ’arab
(share of the Bedouins). In Qa$# .awr/n, some of the revenues were also awarded to the m%r
m%r#n (governor of the wil#yat) of Sh#m (Damascus). The tax revenues of some villages were
divided between two or more recipients, in which case the registers recorded the respective
portions (as a fraction of 24) of all recipients. In such cases, I calculated the amount of tax
revenue to add to each recipient’s grand total by simply multiplying these portions by the tax
revenue of the village. See Co!gel and Miceli (2003) for how risk and transaction costs affected
the allocation of tax revenue among these recipients.
19
the governing and military class in the provinces. There are some obvious differences among the
members of this group, for example between the cavalrymen who typically lived on the same
land as he collected taxes and other members of the governing and military class who lived
farther and thus used agents to collect taxes. More relevant, however, was that all recipients in
this group had the same type of high incentives to maximize the tax revenue, both to increase
their personal living standards and to improve their professional positions.24 In the third
category are the pious foundations (and various other negligible recipients whose combined
revenue was less than two percent of total taxes). Although there were pious foundations of
various types and sizes, as a whole they had the same type of incentives to maximize tax
revenues, which was also distinct from the incentives of those in the two previous categories. As
was the case with the central government, they needed agents to collect tax revenues, and
different people thus collected the taxes and spent the revenue. But because pious foundations
often had a clear focus and local operations and management, they were less likely to suffer from
the same problem of incentives facing the central government.25 By being local and thus clear
and present, the beneficiaries of a foundation were likely to apply strong pressure to increase the
tax revenues. Similarly, although the manager(s) of a foundation did not receive all tax revenues
directly as remunerations for service, they nevertheless had high incentives to maximize tax
revenues in order to fulfill professional obligations and improve service, if not to increase
personal standards of living.
24 There is also a more practical reason for grouping them in the same category. Although these
recipients were clearly identified and separated in other regions, they were not distinguished in
the registers of the qa$# of Hawran.
25 Although some foundations received tax revenues from distant villages, the argument about
differential incentives still applies.
20
To consider the effect of the distribution of tax revenue, I generated three dummy
variables corresponding to the three categories of recipients.26 In the regression equation, I
omitted the dummy variable for the central government to avoid multicollinearity, so the
coefficients of the remaining two dummy variables show the different effect of having a pious
foundation or one of the members of the provincial governing and military class, rather than the
central government, as the primary recipient of the tax revenue.
The distribution of tax revenue could affect the rates differently if there were multiple
recipients of the revenue. For example, one might expect the upward pressure on the tax rate to
be greater in villages where two or more recipients share the tax revenue than in villages with a
single recipient. To account for this possibility, I generated a dummy variable based on whether
a village’s tax revenue was divided (1 if divided between two or more revenue holders).
Finally, I included a set of dummy variables to determine and control for the influences
of possible but unobservable differences among the seven districts comprising the data set. A
variety of unobservable regional factors, such as systematic differences among districts in
climate, topography, and political factors, could have influenced the tax rates. I thus generated
dummy variables corresponding to each of the districts (1 if village is in the stated district). The
dummy variable for Quds is dropped, so the remaining six dummy variables show the way
unobservable factors caused the tax rates of other districts to differ systematically from the tax
rates in Quds.
26 In cases of divided revenue, I coded the holder of the highest share as the primary recipient of
tax revenues.
21
Table 4 shows the results of the regression estimation of influences on the tax rate.27 The
effects of control variables are interesting in their own right. The results show that religious
composition of a village and its distance to the nearest market town did not affect its tax rate
significantly. The distribution of tax revenue and local factors, on the other hand, affected tax
rates significantly and generally in expected directions. The rates were likely to be higher in
villages where multiple parties shared tax revenues. Villages paying taxes to pious foundations
and provincial officials were also likely to pay at higher rates than those paying to the central
government, confirming the expectation about the effect of differential incentives to maximize
the tax revenue. The coefficients of regional dummies are also significant, showing that villages
in other districts except N#bl(s were likely to have lower rates of taxation than those in Quds.
The magnitudes of these influences are also interesting. Because the dependent variable
is in logarithmic form, the coefficients of explanatory variables have a percentage interpretation.
The coefficients of some of the district dummies are considerably high, explaining as much as 32
percent of the difference in tax rates between districts (as can be seen from the difference
between the coefficients of "afad and N#bl(s). For example, given that the dummy variable for
Quds was dropped, the coefficient for "afad indicates that the grain output of a village was likely
to be taxed at a rate about 26 percent lower in "afad than in Quds, holding all other variables
constant. The variables representing the distribution of the tax revenue, on the other hand, had
smaller influences, varying around 3 percent, on the tax rate.
27 The (mean, standard variable) of the non-dummy variables included in the regression
equations are as follows: natural logarithm of tax rate (3.4, 0.19), natural logarithm of the
revenue from output-taxed products (9.4, 0.9), natural logarithm of per-household income from
output-taxed products (6.3, 0.86), percentage of Muslims (0.98, 0.097), distance to nearest
market town (3.0, 2.2).
22
Controlling for other factors makes it possible to identify the individual effects of
incomes and irrigation possibilities. To the extent that a village’s current proximity to sources of
fresh surface water represents the possibilities for irrigation in the sixteenth century, the positive
coefficient of this variable indicates that access to irrigation water did indeed affect the tax rate,
confirming the expectation that the tax rates were likely to be higher in villages with better
access to water than in others.
The coefficients of “Village Income (from Output-taxed Products)” and “Income per
Household” are both significant but with different signs, providing two alternative hypotheses
about the relationship between incomes and tax rates.28 Whereas the significance of the
coefficient of village income supports the view that the whole village’s income served as the tax
base in determining the rates, the significance of the coefficient of income per household
suggests that the tax base was the average income per household. Whereas the positive
coefficient of the former variable indicates a progressive rate-base relationship, the negative
coefficient of the latter indicates that the rate structure was regressive. Unfortunately, we do not
have sufficient information to determine whether it was the total or average incomes that actually
served as the tax base when the rates were first assigned. Further research based on other
sources is required to decide which of these possibilities was the more likely scenario.
Despite being small in magnitude (a one percent increase in average income lowered the
tax rate by about 0.04 percent), the latter result contradicts the argument commonly made in the
literature about the relationship between tax rates and productivity (assuming that higher
28 The simple correlation coefficient between the total income and income per household is 0.44,
suggesting the possibility of a multicollinearity problem between them. The sign and
significance of their coefficients, however, do not change when one of these variables is
dropped. Both variables are thus kept in the reported regression to provide more complete
information about their effects.
23
incomes were generated by higher productivity). One possible explanation for this surprising
result is that the negative relationship between tax rates and average incomes could simply be an
unintended consequence. If, for example, people overcrowded villages with easy access to
irrigation water and the tax rates were based primarily on irrigation possibilities, then (Ricardian)
diminishing returns in agriculture would have caused marginal product and average incomes in
these villages to fall, resulting in a negative relationship between tax rates and average incomes.
If villagers and Ottoman officials were unable to systematically compare average incomes and
tax rates across villages, this unintended outcome may have gone unnoticed. As another
possibility, the rates may have been intentionally assigned to achieve a negative relationship
between tax rates and average incomes. If, for example, the fiscal authorities were concerned
solely with minimizing the distortionary effects of taxation (rather than redistribution) and perhousehold
incomes and supply elasticities of output-taxed products were positively correlated,
then (similar to Ramsey taxes in commodity taxation) optimal taxation would require to assign
high rates to villages with low incomes (inelastic supply). Once again, lack of sufficient
evidence forces us to leave it to further researchers to determine which of these possibilities was
the more likely explanation.
DISCRIMINATORY RATES AND OUTPUT DISTORTION
Taxes are mandatory, but taxpayers are free to adjust their behavior in order to avoid
being taxed as much as possible. The Ottoman taxpayers too had opportunities to shelter some
of their income from taxation by allocating their resources among activities. The difference
between the rate structures of output and input taxes provided such an opportunity. Because the
rates differed among producers for output-taxed activities but were uniform for input-taxed ones,
taxpayers could adjust to their own rates by changing the composition of output between these
24
two types of activities. For example, a village could have adjusted to a high output tax rate by
shifting resources from items subject to the output tax to either non-taxed activities or to those
that are subject to the input tax, such as by converting a grain field to vegetable garden.
Although regulations may have prevented producers from altering their product mix significantly
in any one year, they could have nevertheless achieved desired changes in the long run as
cumulative outcomes of small yearly adjustments. We would thus expect taxpayers with higher
output tax rates than others to produce less of the output-taxed products, all else being the same.
As a corollary, the amounts of input-taxed products (as substitutes for output-taxed products)
would be expected to be higher for high-rate producers than others.
These expectations about the distortionary effects of discriminatory taxation can be tested
by a regression analysis of how tax rates affected output-taxed and input-taxed products in two
separate equations. The dependent variable of the first equation is the revenue from output-taxed
products, which we can easily calculate (as we have already done for the previous regression
analysis) by simply multiplying the taxes listed in the registers for these products by the taxation
factor (inverse of the tax rate). It is much harder to calculate the dependent variable of the
second equation: the revenue from input-taxed products. Although the tax codes stated the tax
rates for inputs clearly, we have no direct information on how to relate these rates to the output
or revenue of these products.29 We can nevertheless estimate input-output rates indirectly by
combining the tax data with more recent information about the productivities and production
processes of some of the items listed in the registers. Information about olives and grapes is
29 Faced with the same problem, H"tteroth and Abdulfattah (1977: 79-85) assumed that the taxes
collected from these products were proportional to their output according to the local taxation
factor, so they calculated the revenue from the production of fruits, vegetables, animal products
and various other products by multiplying the tax amount by the taxation factor of the respective
villages.
25
particularly useful because they could be taxed either as raw products or as finished products like
olive oil and grape syrup, and the registers listed these taxes either individually or as combined
with other taxes, and as based on either inputs or outputs. The registers thus provide information
about the quantities of inputs and the prices of outputs, which we can combine with external
sources on current yields of olive trees and grape vines, the oil or juice contents of olives and
grapes, and the conversion rates of weights and measures between the two time periods to
estimate revenue from taxes. Based on the assumption that yields did not change significantly
since the late sixteenth century, I calculated the ratio of revenue to taxes to be remarkable similar
between these products: 8.1 for grapes and 8.2 for olives.30 Assuming yields to be similar within
the region and tax arbitrage to be possible among input-taxed products, I used the rate of oneeights
for all input-taxed products to convert taxes to revenue in all villages.
I used the same set of independent variables in both equations because the same set of
factors could have potentially, if differently, affected output-taxed and input-taxed products. The
independent variable of primary interest is the tax rate. Among the other variables that could
have also affected production, perhaps the most important were the inputs used in production.
Although the tax registers did not directly record the quantities of inputs, they did record the
numbers of adult males in each village, which we can use to generate a general proxy for all
inputs. Assuming the number of adult males to be proportional to the agricultural labor force
and input proportions to be similar among villages, this measure would represent the units of the
input bundle used in production.
30 For estimates of current average yields, I relied on the Isaac, et al’s (1994) team study of
dryland farming in parts of this region. For conversion rates, see Makovsky (1984: 109-110). To
determine whether the results are sensitive to these calculations, I ran the same regressions with
different rates, as low as one-third (proportion of tax to revenue). The results did not change
significantly.
26
Among the variables created earlier for examining influences on the tax rate, the
availability of irrigation water in a village, its distance to the nearest town, and the recipients of
its tax revenue could have also affected production. So I included these variables in this
regression analysis. I used the information from tax registers to create three new dummy
variables that represent other economic activities in a village. To consider the effects of
commercial activities, I created a dummy variable based on whether the village hosted the
periodic regional market or pursued any urban activities (1 if the village paid b#j b#z#r or other
urban taxes). I created two other dummy variables to consider the effects of making investments
in manufacturing activities. One is whether the village had a water mill (1 if village paid taxes
for 0#-(1), whose presence would indicate a lower cost of converting grain to final products and
could thus have had a complementary, positive effect on grain production. The other dummy
variable is whether the village had a press for grape syrup or olive oil (1 if village paid taxes on
ma’sara), which would similarly indicate a lower cost in the processing of fruits and olives into
final products.31
Just as unobservable differences among districts were found to affect the tax rates
significantly, more localized differences among subdistricts could have affected the productions
of output-taxed and input-taxed products. To control for unobservable differences among
subdistricts in, for example, rainfall, climate, prices, and soil quality, I generated dummy
variables, similar to the district dummies of the first equation, for the forty-two subdistricts
represented in the data set.
31 Some types of olive trees called zayt(n R(m#n% were subject to the output tax, but the registers
did not always record the distinction carefully. Sometimes, taxes from olive trees were lumped
together with other items, such as fruit trees, that were subject to the input tax.
27
Table 5 reports the OLS estimates of influences on the revenues of output-taxed and
input-taxed products separately. One might argue that a method of simultaneous estimation
should have been used to estimate these equations. Recall that the revenue from output-taxed
products was one of the independent variables in the regression analysis of the determinants of
tax rates reported in Table 4. That the tax rate is now an independent variable in Table 5 thus
indicates an interdependent relationship between the tax rate and output-taxed products. Testing
for the endogeneity of the value of output in the equation in Table 4 and of the tax rate in the first
equation in Table 5 weakly confirms that these two variables were indeed jointly determined.32 I
therefore used the two stage least squares (2SLS) method to estimate the two equations
simultaneously. The signs and significance of the coefficients, however, were generally
consistent between the OLS and 2SLS estimates. The coefficients were also surprisingly close.33
Table 5 thus reports only the OLS results in order to avoid redundancy and to maintain
consistency between the two equations.
The results show interesting relationships between the control variables and the revenues
from output-taxed and input-taxed products. The number of adult males affected the quantities
of the two types of products positively, as one would expect. Being close to irrigation water had
an insignificant effect on these products, probably because it affected more the cost of
production than its revenue. Villages with a water mill produced more of both types of products
than other villages. Although the positive effect of mills on output-taxed products confirms
expectations about their complementarity, it is difficult to explain why the same type of positive
32 See Wooldridge (2000: 483) for a description of the test performed.
33 The only coefficient that changed significantly was that of the tax rate, possibly because the
rates in the original data were discrete values that ranged between 1/7 and 2/5 whereas the values
in the instrumental variable used in the 2SLS estimation could be continuous beyond this range.
The results of the 2SLS estimation are available upon request.
28
relationship existed between mills and input-taxed products. Consistent with grape syrup and
olive oil being output-taxed products, having a press for grape syrup or olive oil affected the
production of output-taxed products (but not input-taxed products) positively. The presence of
urban and commercial activities in a village, on the other hand, affected the input-taxed products
(but not output-taxed products) positively, indicating a complementary relationship between
them. Although the distribution of tax revenue also affected production in interesting ways, it is
beyond the scope of this paper to examine them in detail.34
The coefficients of the tax rate in the two equations show how taxes distorted output.
The negative coefficient of the tax rate in the first equation confirms the expectation that, all else
being the same, taxpayers adjusted to higher rates by producing less of the output-taxed products
(and substituting by others). The positive coefficient of the tax rate in the second equation shows
the other side of the substitution effect: taxpayers substituted output-taxed products with inputtaxed
ones as those with higher rates produced more of the latter. The magnitudes of these
effects are also interesting. Because both variables are in logs, the coefficients of the tax rate
reflect tax elasticities of the two types of products. Tax elasticity of supply is low in both cases,
possibly caused by the immobility of resources and restrictions on changing the composition of
products.
DISTRIBUTIONAL CONSEQUENCES
One of the features of the Ottoman government frequently emphasized in the literature is
their concern about fairness in taxation. The rulers appear to have taken various measures to
34 Because of space limitations, the results of the dummy variables that control for the
differences among the forty-two subdistricts are not reported in the Table. A majority of these
variables affected output significantly, confirming the importance of local factors in production
decisions.
29
prevent inequitable practices in collecting taxes. They announced great pride in changing some
of the taxes in the newly conquered lands, such as by commuting labor services in the European
provinces, in attempts to introduce fair and just taxation. They similarly established clear
regulations about how and when taxes should be collected and how tax collectors should not
abuse their power. When one type of tax was replaced by another, for example, the tax codes
often explicitly prohibited tax collectors from taking advantage of the situation by collecting
both types of taxes. Observing these measures against unjust taxation, leading historians of the
Empire have typically portrayed the Ottoman legal and financial system as fundamentally fair.
&nalc'k (1973: 73-4), for example, writes that the Ottoman laws “introduced a system of taxation
which was in general simpler and less liable to abuse than the earlier systems of feudal services.
[Various] regulations aimed to prevent the military class oppressing the peasantry and, therefore,
assessment according to means and collection according to law were the governing principles of
the tax system.”
The question then becomes whether preserving discriminatory rates in the Fertile
Crescent was consistent with the Ottoman concern for fairness. One of the standards of fairness
is vertical equity, which suggests that individuals who are in a position to pay higher taxes than
others should do so. If there were significant, systematic differences among villages in their
ability to generate income, vertical equity thus requires a discriminatory rate structure to assign
higher rates to those who are in a position to pay more than others.
Although the negative relationship between the tax rates and the per-household revenue
from output-taxed products (Table 4) suggests a regressive system of taxation, this does not by
itself mean that the tax system worsened the distribution of incomes as a whole. As the results in
Table 5 show, the taxpayers were able to adjust their total net incomes by responding to higher
30
rates by decreasing the production of output-taxed products and increasing input-taxed products.
To determine how tax rates affected incomes, we thus need to consider not just the revenue from
output-taxed products but the net incomes from all activities.
I used the tax data and previous regression results to calculate and compare the total
after-tax incomes under discriminatory and uniform rate structures. I used the same procedure
outlined above to estimate a village’s income from output-taxed and input-taxed products with
discriminatory rates. Subtracting the amount of total taxes paid by the village and dividing the
result by the number of households gives the net per-household incomes in a village. To
simulate what the incomes would have been under a uniform rate structure, I used the regression
results reported in Table 5. Simple calculations show that the uniform tax rate that would be
required to generate the same amount of tax revenue (as with discriminatory rates) is 29.25
percent. Substituting this for the tax rate in the data and using the regression equations to
calculate the predicted value of the dependent variable for each village gives the simulated
revenue from output-taxed and input-taxed products corresponding to this tax rate, all else being
the same. Similarly recalculating the taxes corresponding to this rate and subtracting them from
revenues, I estimated the net incomes under a uniform rate structure.
Table 6 shows the distribution of income under the two types of rate structures at
different points of the distribution. The distribution is shown separately for villages that were
near and distant from sources of irrigation water to determine whether any redistribution took
place between them. Contrary to expectations raised by the literature, the distribution is less
equitable under discriminatory rates than under uniform rates. Discriminatory rates decrease the
shares of total income received by the poorest 80 percent of the households, while increasing the
share of the richest 20 percent. It is also interesting that redistribution was more pronounced
31
among villages distant from sources of irrigation. Even though the magnitude of redistribution
was small, the direction of redistribution nevertheless shows that the discriminatory rate structure
was regressive.
This does not mean, of course, that the system of discriminatory taxation was originally
intended to be regressive or that the Ottomans intended to use the tax system to redistribute
income from high-income to low-income villages. Such interpretations of the results have to
wait until more direct evidence can be found about the origins of the system or about the
Ottoman’s intentions in preserving it.
The results nevertheless suggest an alternative to the standard reason offered in the
literature for why the Ottomans preserved some types of taxes after conquest and changed others.
It may have been simple pragmatism and concern with political stability, rather than an
overriding concern for justice and equity, that determined Ottoman policy. They may have thus
chosen to preserve the discriminatory rate structure in the Fertile Crescent not because they knew
about and agreed with its redistributive consequences but because they found it politically more
feasible to preserve than abolish a system that had been in existence for centuries. Unlike the
commutation of labor services in the European provinces that was typically welcomed by all
peasants, the switch from discriminatory to uniform rates would have faced significant resistance
because the Ottomans would have had to lower the rates for some villages but raise them for
others in order to preserve the same tax revenue.
CONCLUSION
Combining information from the tax registers of the Ottoman Empire with other
information about the physical characteristics of villages, this paper has examined the
determinants and consequences of discriminatory taxation in the Palestine, southern Syria, and
32
Transjordan region in the late sixteenth century. The results support the widespread belief that
the availability of irrigation water was one of the determinants of discriminatory rates in this
region. The widespread belief about the positive relationship between the tax rates and
productivity, however, receives no support.
As an adverse consequence, discriminatory rates caused distortion in output. Consistent
with behavior expected from rational decision-makers, the producers in this region responded to
taxes by reallocating their output between discriminatorily taxed and other products. All else
being the same, villages with higher tax rates produced less of the discriminatorily taxed
products and more of other products, and vice versa. By altering the cost of production among
producers and causing them to alter the product mix, discriminatory rates thus caused
inefficiencies in production.
Whereas inefficiencies in taxation can sometimes be justified by more equitable
distribution of income, discriminatory taxation in this region actually made the distribution even
less equitable. Contrary to arguments raised in the literature, a comparison of the distribution of
income under uniform and discriminatory rate structures shows that discriminatory rates
worsened the distribution of income by redistributing it from all other villages to those in the
richest 20 percent group. By preserving, if not initiating, such a regressive system of taxation,
the Ottoman administration must have, if unintentionally, contributed to the persistence of
income inequalities in this region.
33
WORKS CITED
• Akg"nd"z, Ahmed. 1990. Osmanl' Kanunn#meleri ve Hukuk% Tahlilleri. &stanbul: Osmanl'
Ara!t'rmalar' Vakf'.
• Arnon, Itzhak. 1992. Agriculture in Dry Lands: Principles and Practice. NY: Elsevier.
• Ashtor, Eliyahu. 1976. A Social and Economic History af the Near East in The Middle Ages.
Berkeley: University of California Press.
• Bakhit, Muhammad Adnan. 1982. The Ottoman Province of Damascus in the Sixteenth
Century. Beirut: Librairie du Liban.
• Bakhit, Muhammad Adnan and Nufan Raja Hmuod. 1989. The Mufassal Defter of Marj Bani
‘Amir and Its dependents Entrusted to Amir Tarabey 945 A.H./1538 A.D. Amman: The
University of Jordan.
• Barkan, *mer L"tfi. 1943. XV ve XVI. As'rlarda Osmanl' &mparatorlu2unda Zirai
Ekonominin Hukuki ve Mali Esaslar' . Cilt 1: Kanunlar Istanbul 3niversitesi yay'nlar'ndan.
Edebiyat Fak"ltesi T"rkiyat Enstit"s" Ne!riyat'. Istanbul, Burhaneddin Matbaasi.
• Barkan, *mer L"tfi. 1964. “*!"r,” &sl#m Ansiklopedisi IX: 485-88.
• Beaumont, Peter, Gerald H. Blake, and J. Malcolm Wagstaff. 1976. The Middle East: A
Geographical Study. NY: John Wiley & Sons.
• Butzer, K. W. 1961. “Climatic Change in Arid Regions since the Pliocone,” in L. Dudley
Stamp, ed. A History of Land Use in Arid Regions. France: UNESCO, pp. 31-56.
• Co!gel, Metin M. 2003. “Ottoman Tax Registers (Tahrir Defterleri),” Historical Methods,
forthcoming.
• Co!gel, Metin M. and Thomas J. Miceli. 2003. “Risk, Transaction Costs, and Government
Finance: The Distribution of Tax Revenue in the Ottoman Empire,” Working paper.
• Diamond, Peter A. and James A. Mirrlees. 1971. “Optimal Taxation and Public Production
I: Production Efficiency,” and “Part II: Tax Rules,” American Economic Review 61: 8-27 and
261-78.
• Floor, Willem. 1998. A Fiscal Study of Iran in the Safavid and Qajar Periods, 1500-1925.
New York: Bibliotheca Persica Press.
• Food And Agriculture Organization of the United Nations. 1997. Irrigation in the Near East
in Figures. Rome: FAO.
• Holcombe, Randall G. 1998. “Tax Policy from a Public Choice Perspective,” National Tax
Journal 51(2): 359-371.
• H"tteroth, Wolf-Dieter and Kamal Abdulfattah. 1977. Historical Geography of Palestine,
transjordan and Southern Syria in the Late 16th Century. Erlanger Geographische Arbeiten,
Vol. 5, Erlangen.
• Isaac, Jad, et al. 1994. Dryland Farming in Palestine. Applied Research Institute-
Jerusalem.
• &nalc'k, Halil. 1954. “Ottoman Methods of Conquest,” Studia Islamica II: 103-130.
• &nalc'k, Halil. 1959. “Osmanl'larda Raiyyet R"sumu,“ Belleten Cilt 23, Say' 92, pp. 575-
610.
• &nalc'k, Halil. 1960. “K#n(nn#me,” Encyclopedia of Islam, Second Edition.
34
• &nalc'k, Halil. 1973. The Ottoman Empire: The Classical Age, 1300-1600. London: Phoenix
Press.
• &nalc'k, Halil. 1994. [with Donald Quataert]. An Economic and Social History of the
Ottoman Empire, 1300-1914. New York: Cambridge University Press.
• Johansen, Baber. 1988. The Islamic Law on Land Tax and Rent. New York: Croom Helm.
• Kark, Ruth. 1997. “Maml(k and Ottoman Cadastral Surveys and Early Mapping of Landed
Properties in Palestine,” Agricultural History 71(1): 46-70.
• Lambton, A.K.S. 1962. “Khar#dj,” Encyclopaedia of Islam. Second Edition. Leiden.
• Lewis, Bernard. 1951. “The Ottoman Archives as a Source for the History of the Arab
Lands,” Journal of the Royal Asiatic Society 3-4: 139-55.
• Lewis, Bernard. 1979. “Ottoman Land Tenure and Taxation in Syria,” Studia Islamica 50:
109-24.
• L$kkegaard, Frede. 1950. Islamic Taxation in the Classic Period, with Special Reference to
Circumstances in Iraq. Copenhagen: Branner and Korch.
• Makovsky, A. 1984. “Sixteenth-century Agricultural Production in the Liw/ of Jerusalem:
Insights from the Tapu Defters and an Attempt at Quantification,” Archivum Ottomanicum 9:
91-127.
• Moosvi, Shireen. 1987. The Economy of the Mughal Empire c. 1595, A Statistical Study.
Delhi: Oxford University Press.
• Nuwayr%, A-mad ibn ‘Abd al-Wahh#b. 1923-42. Ni-#yat al-‘Arab f% Fun(n al-Adab. Cairo.
14 volumes.
• Poliak, Abraham N. 1977. Feudalism in Egypt, Syria, Palestine, and the Lebanon, 1250-
1900. Philadelphia: Porcupine Press.
• Ramsey, Frank. 1927. “A Contribution to the Theory of Taxation,” Economic Journal 37:
47-61.
• Rhode, Harold. 1979. The Administration and Population of the Sancak of Safad in the
Sixteenth Century. Ph.D. Dissertation, Columbia University.
• Singer, Amy. 1990a. “Tapu Tahrir Defterleri and Kad' Sicilleri: A Happy Marriage of
Sources,” Tarih: a Volume of Occasional Papers in Near Eastern Studies 1: 95-125.
• Singer, Amy. 1990b. “The Countryside of Ramle in the Sixteenth Century: A Study of
Villages with Computer Assistance,” JESHO 33: 51-79.
• Singer, Amy. 1994. Palestinian Peasants and Ottoman Officials: Rural Administration
around Sixteenth-Century Jerusalem. New York: Cambridge University Press.
• Slemrod, Joel. 1990. “Optimal Taxation and Optimal Tax Systems,” Journal of Economic
Perspectives 4(1): 157-78.
• Stiglitz, Joseph E. 1999. The Economics of the Public Sector. Third Edition. New York: W.
W. Norton &Company.
• S(d%, S"leyman. 1996. Osmanl' Vergi D"zeni [Defter-i Muktesid] Isparta.
• Venzke Margaret L. 1997. “The Ottoman Tahrir Defterleri and Agricultural Productivity”,
Osmanlı Araştırmaları [The Journal of Ottoman Studies] 17: 1-61.
• Whyte, R. O. 1961. “Evolution of Land Use in South-western Asia,” in L. Dudley Stamp, ed.
A History of Land Use in Arid Regions. France: UNESCO, pp. 57-118.
35
• Wooldridge, Jeffrey M. 2000. Introductory Econometrics: A Modern Approach. South-
Western College Publishing.
36
TABLE 1
EXAMPLES OF TAX RATES IN OTTOMAN DISTRICTS
DISTRICT
(YEAR)
PERSONAL TAXES TRADE
TAXES
PRODUCTION TAXES
Input taxes
Output
taxes
4ift-tax
Bachelo
r Tax
Gate
Tax
Examples of
Goods Brought
to Market Beehives
Animal
Products Vineyards Tax Rate
Antep (1574) 40 6 1 / camel-load
of
miscellaneous
goods
2 / beehive 0.5 /
animal
0.02 /
vine
Uniform
1 / 10
Budin (1562) 50 4 / wagon-load
of pots and cups
1/10 or
2 / beehive
0.5 /
animal
4 / d5n"m Uniform
1 / 10
Quds
(Jerusalem)
(1562)
20 / camel-load
of linen
1 / beehive 0.5 /
animal
0.1 / vine Discrimi
natory
between
1/7 and
2/5
Malatya (1560) 50 6 [none specified] 1 / beehive 0.5 /
animal
0.03 /
vine
uniform
1 / 5
Notes: All monetary values are in the Ottoman currency of Ak)e. D5n"m is a measure of land.
Because of their customized nature, the rates for enterprise taxes are not reported.
Sources: Ottoman provincial k#n(nn#mes. Akg"nd"z (1990), Barkan (1943).
37