Historical Development of

Taxation : Part-1
Prepared by
Prof. Dr. Fisseha-Tsion Menghistu
2011
NB: Not 4 Circulation wihtout Permission
 Relations between Society,
Government & Taxation
• Society is more than a sum of individuals and that the
collective interest of society is beyond individual interest.
Mutual survival and mutual coexistence compels any
individual or tribe from opting out of society. In that sense,
there ahd been a strong social and moral pressure not to
opt out of once own society.
• Taxes are one of the oldest phenomena of human society
intended to preserve, promote and foster common
interest of society. Each is expected to contribute or
sacrifice in the form of labour, or goods etc

• Taxation is ``an individual sacrifice for a collective goal``

 Government & Society
• Governments are central that societies
cannot do without.
• Defense of the group against attacks from
outside became central
• Individual contribution to the collective
interests became crucial survival mechanism
or instrument.
 Historic development of tax law
• This deals with the question of standards to use to fix
contributions, which fiscal techniques were used for
that purpose, how a system of rules developed? etc
• As leaders and Governments kept on imposing taxes
and the burden became too much, there was a
necessity for tax payers to appeal so that they could
enjoy increasing legal protection, and how a number of
basic types of separate taxes could develop.
• The historical development of tax law must also be
seen in the context of general history of society and
modenization.
 Significance of taxes
• The development of taxes went hand in
hand withe the development of society. Thus
taxes acted as a catalyst. 2
 Tax History of Europe
• After waging many years of war, the people
of Europe felt that a lasting peace was a
precondition for democracy and the
development of their societies. 3
• Despite their dioverse cultures, languages and
historical developments they managed to
forge an European identity.
 Cont..
• However, Europe did not exist in the current
geographical concept. However, the south,
the West and the East shared a common
past as parts of the ROMAN EMPIRE which
had been split into a western and an eastern
in the third century.5
 Western Roman Empire
• Comprised of Italy, Spain and France together with a
great part of England and Germany. But this empire
was destroyed in 476
• The German tribes comprised France, Germany and
England
• Western Roman Empire rose again on Christmas Day
in the year 800 when Charlemagn (768-814) crowned
as a Emperor of the Frankish Kingdom which streched
far beyond the Pyrenees and from North Sea, to
beyond Rome. His kingdom more or less corersponded
to what we now call Western Europe except the British
Isles and the east of Germany. 5
 Frankish Kingdom
• Though large and powerful was beseted by
internal weaknesses. Hence ,its unity was
under constant threat.
• Conquered peoples were allowed to maintain
their own customs, traditions and legal
institutions. Because of this their urge for
secession was discouraged.
 Common taxation dissapeared
• The taxation left by the Romans was not kept
up-to-date
• Exemption of taxes became a sort of
remuneration for loyal civil servants
• The king lost his grip of local authorities
 Some causes for the decline:

-Emergence of elected local nobility later the

office of count which later became hereditary
-Decrease in prosperity
-Replacement of the monetary economy
 Treaty of Verdon 843
• The Frankish Kingdom was divided among
Charlemagn`s grandsons and split into eastern,
middle and western sections.6
• National disintegration took place. Charlemagn
dynasty died in 911
• The middle consisted mainly of Germany
• The Germans elected Dukes from their own
ranks, Conrad (911-918)
• This made the separation of France and
Germany permanent. 6
 Western Frankish realm developed
differently
• In 987, Carolingian dynasty (751-911) died.
• The magnates who had the power to select a
new king elected Hugh Capet as king of the
territory we now call France.
• The king had limited powers because the dukes
and counts had more real power although he
was seen as sovereign. In reality, the king‘s
power only extended as far as his own territory-
around Paris-7
• The 7 Capetian kings enjoyed long reign. Their
eign became hereditary.
 Cont..
• In a century long battle the French kings
suceeded in eliminating the dukes and counts
one by one. The kings were able to annex
their territories thereby leading a strong,
unified and centralized state. (Compare &
contrast with the era of Atse Tewodros, Atse
Yohannes, Menelik amnd haile Sellassie)
 Cont..
• Taxation worked as a lever both to bring
about the disintegration of the Holy Roman
Empire, and to assist in the construction of
the French state. 7
 Cont..
• In Spain, the the Moors were driven back
during the period of Reconquista using up all
monetary and economic forces.
 Cont..
• Southern Italy was however, the bone of
contention between Byzatium, the
continuation of the Eastern Eastern Roman
Empire, and the Saracens, the collectiv e
name for the followers of the Islam, while
the northern part of Italy was part of the
Holy Roman Empire.
The increase in number cities lead
to Trade Plus..
• From the beginning of the 11th century, a
numner of city-states were also developing-
including Milan, Venice, Genoe, Florence,
Siena, Pistoia, Bologna, Mantova.
 Cont..
• Due to their flourishing trade, they were
achieving a near independence status.
However, these city states were quarreling
with each other switching allegiances
between both the Pope and the Emperor to
act as their ally.7
 Cont..
• Urban culture of the cities in the north of
Italy greately influenced Europe, in both the
arts and in the administrative organization of
society 7
 England
• The battle of Hastings in 1066- a decisive point
of history. The country came under the rule of
William the Conqueror, Duke of Normandy. As a
result, Norman (French) culture influenced not
only the English language, but also the customs,
traditions and legal institutions such as
feudalism which flourished on the Continent.
• In England the king had more than his German
and French counterparts
William the conqueror & England
• William was able to create a unified state in
which hereditary sucession was not disputed.
This implied that he did not have to depend
heavily upon the loyalty of his vassals who
were also rewared handsomeley by way of
receiving large territories.
• NB: Compare this with the era of Emperor
Haile Sellassie
 Feudal system
• This goes back to the turbulent and anxious
times of the migration of the Germanic
peoples.
• Weaker people put themselves under the
protection of and shelter of those more
powerful.
 Cont..
• It later became customary for lords to grant
land in fief to their vassals who in turn
controlled and exploited the inhabitants of
the land they governed. Fiefs became
hereditary
 From fragmentation of public
authority to appointed ...
• Subbordinates were appointed to carry out
the administration of government 9
• Transition from feudalism to a system of
territorial sovereignty.
 Cont..
• Renaissance of Roman Law- became a sort of
comon law even within German peoples
• The difference between German and Roman
concept of society is that Germans focus on
personal ties, the family and tribe while
Romans on territory and land.9
 2nd half of the the 11the century
• The growth of prosperity
• Increase in production of crops due the invention
of smelting of iron and the introduction of tnew
methods of agriculture threefold system- winter
and summer cereal, and lying fallow, the
increasing number of craftsmen, increased trade
and monetary transactions 8
• Cities walked up from their sleep, stagnation etc
 Cont..
• Excercise of power was based on German law
based on personal ties between a limited
number of persons in charge of society
moved to terrotorially defined state. 9
• Civil servants were the executioners of royal
power, displaced the feudal system.
• Taxation played an important role
• (Compare this with our “Bejirewonds“)
 German emperor-Frederick
Barbarossa 1152-1190
• Died in 1190 drowned in a river in Turkey
• But after two years from becoming king, in
1152 emperor-Frederick Barbarossa travelled
to Rome to have himsef crowned emperor by
the pope.10
 Cont..
• 4 years later he went to Northern Italy with a
powerful army. He convened a Diet in
Roncaglia in Novembner in order to discuss
with worldly and clerical dignitaries from the
whole empire, south and north of the Alps. It
is from this the Royal rights emerged.10
 Medieval society-relationship
between lords and subjects
• During the Diet in Roncaglia in 1158 four
professors of law from Bologna namely
Martinus, Bulgarus, Jacobus and Hugo were
given the honourable and to define in more
detail the scope and content ofd of the royal
rights (Regalia)
 Cont..
• The Emperor went on horse ride with
Martuns and Bulgarus. He asked them if his
power stretch to such an extent that he had
ownership of the whole world, also in the
sense of private law?
 Cont..
• Bulgarus did not accept. But Martinus
accepted it. As a gratitude he named his horse
aequus in latin to Martinus. Bulgarus thought
that it was not fair (aequus). He said I have
lost a horse, because I said something right
which is not fair to the King 10
• Sovereign rights were excuted by the counts
• Regalia vs. Domains (the later is related to
immovable property)
 Towards the establishment of
direct taxes
• When the Frankish king travelled with his royal
household to govern and to administer justice, he
was supported by the local revenues collected
from his domains 11
• property, land, the right to exploit silver mines etc
• Special tax on non immovable property
• Financial rights and powers
• Could call upon his subjects to undertake military
service or could collect money.11
 Toll prerogative led to import,
export & transit duties
• Payment to the prince in return for apparent
favours from his side.

• Q what does the historical development of

Taxation in Europe show?
• Can we compare and contrast with the
historical development of taxation in
Ethiopia? Please explain in more detail