Taxes: From Gabelle to Modernity

The partner and head of the International Taxation and Deloitte Private practice in Ukraine has launched a new series of essays focused on the history of tax systems and their profound influence on humanity. These narratives not only unveil the historical context but also demonstrate how taxes have molded societies throughout the ages. The author emphasizes that while some tax concepts may appear ludicrous at first, they often have deep historical roots that merit exploration.

The author admits he had not intended to revisit the topic of taxes, believing that one season of discussion was sufficient. However, as he reflects, "never say never," and today, we embark on a journey through time to revisit the taxation practices of various eras and peoples. Among the new terms that have emerged in the Ukrainian language, the word "gabelle" has gained particular popularity, often used to denote an end or a deadlock. As one charismatic politician, who recently received a notice from the National Anti-Corruption Bureau (NABU), lamented, "Everything is lost!" Yet, the origins of this word reveal a much deeper history, as it entered the Ukrainian lexicon through Polish, originally meaning a tax.

Interestingly, the history of the term "gabelle" dates back to the 14th century when French kings, after suppressing the religious opposition of the Cathar-Albigensians, took control of the coastal areas and salt extraction sites. Salt was an extremely valuable commodity, and King Philip VI introduced a salt tax known as Pays de grandes gabelles in 1341. This term is not of French origin; it came through Italy from Arabic, where it was pronounced as "qabala" and also translated as "tax."

French monarchs, controlling all saltworks, decided they had the right to compel the population to purchase salt mandatorily. All residents aged eight and older were required to buy seven kilograms of salt per year, paying a fixed price weekly. This was a true burden, as no one could physically consume that amount of salt. To collect the "salty" tax, the country was divided into six regions, each with significantly different tax rates. Some provinces "corrupted" the royal government by agreeing to pay a fixed fee so that their residents would not have to pay for salt, while other regions specifically stipulated in their annexation agreements that the gabelle would not apply to them.

The consequences of such taxation were evident: by the late 18th century, the price of salt varied by as much as twenty times across different regions of France. This disparity led to a flourishing of "salt smuggling," where goods were transported from "cheap" regions for sale in "expensive" areas. Smugglers were hailed as folk heroes, while the customs police, known as gabelous, created to combat them, were despised and ridiculed. Customs officers were often accused of harassment, as women frequently transported smuggled salt hidden under their skirts.

In response to the lack of success in combating smuggling, the state began to punish not only smugglers but also ordinary citizens. For instance, a shepherd who allowed his flock to drink from a salty spring could face criminal charges, while fishermen who went out at night to catch fish were also regarded as smugglers. Jean-Baptiste Colbert, a renowned economist, ultimately codified the laws regarding the salt tax, comparing taxation to the art of plucking geese to obtain the most feathers with the least amount of noise. The French, accused of salt smuggling, faced hard labor on galleys, while repeat offenders risked the death penalty.

Even this did not halt smuggling. In some regions, the government was forced to maintain large military garrisons to combat illegal trade. Each year, approximately 3,000 people ended up on galleys or were executed for smuggling. The salt tax became one of many catalysts for the French Revolution, during which the populace overthrew numerous burdensome taxes, including the gabelle. However, after Napoleon regained power, the tax was reinstated and was not abolished until 1945.

The moral of this story is straightforward: monopolies can tempt monopolists to impose completely non-market conditions. Unjust "rules of the game" encourage widespread violations, and even criminal penalties cannot deter them. Therefore, esteemed legislators, we wish you sound judgment and recommend thoroughly studying the history of the French Revolution before considering tax legislation. For those who do not learn from history, a complete gabelle awaits.