Tax Farming Revenues and Accounting in Ottoman Finance: The Case of Kocaeli (1846–1847)

Abstract

Unlike the European nations that shifted from privatized tax collection to a centralized government control system, the Ottoman Empire successfully maintained its tax farming system. Yet, there is ample evidence against the views that such a system was backward and wasteful are not entirely correct, but that the Ottoman tax collection method was successful in its own historical context. Therefore, the aim of this study was to reveal evidence of whether the Ottoman Empire implemented a successful tax farming system in the 19th century based on the accounting records of tax farming revenues considering the Ottoman public finances, institutional infrastructure, and administrative practices in a broader European context. Accordingly, the present study utilized the Prime Minister’s Ottoman Archives, the records of Revenue (Varidat) Accounting Administration, and the tax farming auctions in the Central Council (Majlis-i Val’a). The economic and financial conditions of the period were also considered in the analysis of the data. Evaluation of the tax collected by tax collectors in Kocaeli Province (Sancak) revealed the nature of economic activities in the empire. It can be stated that tax collectors in Kocaeli Province paid the total amount of 395,612 Guruş (Ottoman currency) tax revenue in five installments in 3 months and that the highest tax was collected from the sales of alcoholic beverages. Adet-i Ağnam (the tax collected for sheep and goat breeding) collected from each district was auctioned for tax farming price of 51,610 Guruş. In addition to these taxes, taxes from trade, forestry, maritime, and industrial production were included in the tax farming revenues. Overall, considering the adverse political and economic conditions in the historical process, the Ottoman Empire’s tax farming system was successful in collecting taxes and was a part of the formation of the modern Ottoman public finance system.