An Encyclopaedia on Chinese History, Literature and Art

zhengshang 征商, commercial taxes

May 7, 2016 © Ulrich Theobald

The term commercial taxes (zhengshang 征商) includes taxation on markets (shishui 市稅, shizu 市租), for produce, for exchange, customs (guanshui 關稅), and mining (kuangke 礦課) and salt production tax (tangke 場課). The oldest evidence for a kind of commercial tax in ancient China is the ritual Classic Zhouli 周禮, which mentions taxes for passes and markets (guan shi 關市). Passes were spots on important traffic routes on which merchants had to pay a tax for the commodities they transported. The book Mengzi 孟子 (ch. Gongsun Chou 公孙丑 B) tells a story of a man who, instead of just exchanging what he owned against something he did not own, "looked right and left, to catch in his net the whole gain of the market. The taxing of traders took its rise from this mean fellow." (transl. James Legge) The philosopher Meng Ke 孟軻 (372-289 BCE) criticized the use of frontier-gates as points of payment as a means of exploitation.

Free trade was an important component of the fiscal policy of the Qin dynasty 秦 (221-206 BCE). Passes and briges were protected by the government, and any restrictions to exploit the treasures of mountains and lakes were abolished, to cause "rich merchants and the great entrepreneurs to spread over the empire" (fu shang da gu zhou liu tianxia 富商大賈周流天下, from Shiji 史記, 129 Huozhi liezhuan 貨殖列傳). This situation only changed with the dire need for higher state revenue for the many military campaigns carried out by Emperor Wu 漢武帝 (r. 141-87 BCE) of the Han dynasty 漢 (206 BCE-220 CE).

At the same time Confucianism was made state doctrine. One of its propositions was that merchants belonged to the class of exploiters, and therefore wholesale and retail business had to be suppressed and controlled as far as possible, particularly by the supervision of the distribution of important goods like salt and iron. This was the famous salt and iron debate (reflected in the book Yantielun 鹽鐵論) as a result of which the imperial state assumed the monopoly of the salt trade (see salt tax), and reaped high benefits from its taxation. The state tried to check the accumulation of capital by merchants and moneylenders. They were taxed at 1 suan 算 (120 qian 錢) of money for each 2,000 qian of profit. Craftsmen were likewise taxed, at a rate of 1 suan per 4,000 qian of profit. Even for the ownership of a transport vehicle 2 suan of money were to be paid (annually), and owners of boats paid 1 suan per 5 zhang 丈 (a length measure, see weights and measures) of boats. Merchants not correctly reporting their profits were punished severely. Some historians explained that these measures led to the ruin of many a merchant family during the Han period.

Emperor Wen 魏文帝 (r. 220-226) of the Wei dynasty 曹魏 (220-265) lowered the taxes to be paid at passes and fords (guan jin 關津) and reintroduced the ancient custom taxing commercial revenue at 10 per cent. Traders on markets were taxed at a rate of 4 per cent of the turnover. For the sale of serfs, horses and cattle, as well as of real estate and houses, the government taxed according to official certificates (wenjuan 文券) recording the value of the traded object. This assessment was called shugu 輸估, in contrast to "spontaneous assessment" (sangu 散估) for objects whose value was not documented. Special custom taxes existed during the Eastern Jin period 東晉 (317-420), where the passing of pontoon bridges was taxed (hengshui 桁稅), and under the Southern Qi 南齊 (479-502), where the use of draft oxen at fords was taxed (niulaishui 牛埭稅).

The early Tang dynasty 唐 (618-907) abolished the use of customs and fords as points of payment, but it was reintroduced in 782, with a taxation rate of 20 per cent for capital goods transported. In addition to that, the production of bamboo, timber, tea and lacquer were taxed at 10 per cent. This kind of tax on industrial goods was retained by the Song 宋 (960-1279), Yuan 元 (1279-1368) and Ming 明 (1368-1644) dynasties, under the names choujie 抽解 or choufen 抽分.

The highly urbanized and commercialized economy of the Song period made commercial taxes the main source of state income, at least for some time. In other ages, agriculture was the main source of state revenues. In 960 Emperor Taizu 宋太祖 (r. 960-975) of the Song issued rules for the taxation of commerce (Shangshui zeli 商稅則例). There were custom and market taxes, taxes on cloth, household wares (shiqi 什器), fragrances and drugs (xiangyao 香藥), precious stones, domestic animals (particularly sheep and pigs), the business in real estate, and tea and salt. Dealing in contraband was severely punished. Taxation rates were regulated in detail. Travelling merchants were taxed by the passage tax (guoshui 過稅), but also settled enterprises (zhushui 住稅), the former at a rate of 2 per cent, the latter at 3 per cent. Some authors lamented that "even empty markets were taxed, and boats without merchandise".

The Ming dynasty intensified the taxation of market booths and display tables, as well as the taxation of mining products. At fords and passes, the Ming as well as the Qing dynasty 清 (1644-1911) applied two types of taxes, namely one at "bill passes" (chaoguan 鈔關, by the Qing called huguan 戶關), and one at "working passes" (gongguan 工關). The former was called so because traders used to pay with paper bills (chao 鈔) the levy for the merchandise on their boats, the latter because at those spots mainly processed goods from the woodlands were taxed. Its revenue belonged to the Ministry of Works (gongbu 工部), that of the former to the Ministry of Revenue (hubu 戶部). In fact, there was vitually no merchandise that was not taxed in any way, some even several times.

In 1853 the likin tax (lijin 釐金) was introduced, which was a more modern type of commercial tax.

Huang Yunwu 黃運武, ed. (1992). Xinbian caizheng da cidian 新編財政大辭典 (Shenyang: Liaoning renmin chubanshe), 1017.
Sun Yigang 孫翊剛 (1992). "Zhengshang 征商", in Zhongguo da baike quanshu 中國大百科全書, Caizheng shuishou jinrong jiage 財政·稅收·金融·價格 (Beijing/Shanghai: Zhongguo da baike quanshu chubanshe), 498.