Enlarge text
Reduce text
Printable version
Send to someone
- Students and teachers
- Tax terms
- The income tax return
- Information about consumption taxes and income tax
- The history of consumption taxes and income tax
- A few notable dates in history
- Sales in Québec: taxable, zero-rated or exempt
- Taxable or not?
- Advertising relating to consumption taxes
- The origins of certain consumption taxes
- Activities for 10- to 12-year-olds
- Joining the work force
- Revenu Québec online
- Statistics
- Useful publications
- Educational material
- Bibliothèque et Archives nationales du Québec
- Commission de la santé et de la sécurité du travail
- Commission des normes du travail
- Institut de la statistique du Québec
- Ministère de l'Éducation, du Loisir et du Sport
- Ministère des Finances du Québec
- National Assembly of Québec
- Québec portal
- Régie des rentes du Québec
- Secrétariat du Conseil du trésor
- Services Québec
The history of consumption taxes and income tax
Written by Claire Gourdeau, historian
Translated by C.J. MacDonald
- Introduction: ancient times
- Medieval Europe
- 16th- to 18th-century France
- Dealers in fur and taxation in New France
- Taxation and the seigneurial system
- 1763: the start of British rule
- Confederation
- 20th-century Canada
- Conclusion: the present-day situation
- Glossary
- Bibliography
Since ancient times, tax has been defined as a mandatory contribution, accepted willingly or unwillingly by the members, known as "taxpayers," that make up a state. Taxes fund the public expenditure of the state, for such things as roads, bridges, railroads, hospitals and schools. In order for citizens to spontaneously accept paying income tax and consumption taxes, they must perceive that the taxes are necessary, fair and reasonable, and help to ensure their well-being and security.
More than 3,000 years ago, the inhabitants of ancient Egypt and Greece paid income tax, consumption taxes and customs duties. These payments were made in various forms, such as goods, days of unpaid labour (corvées) and fines. In ancient India, a tax was levied on livestock and precious stones. In Athens, grain was taxed. The Emperor Augustus (27 B.C.) introduced an excise tax on goods, including slaves, sold in the public markets of Rome. The salt tax, or gabelle, dates back to the start of the Roman period, that is, to the 8th century B.C.
In Europe, during the Medieval period (500 to 1500), days of unpaid labour were required of inhabitants, who had to maintain the lords' castles, the roads and bridges leading to the castles, and the moats surrounding them. However, the masses tolerated this tax, remitted in the form of unpaid work, because these same castles served as fortresses and shelters for them in wartime.
From the 16th to the 18th century, during the reigns of the French kings Henry IV, Louis XIII and Louis XIV, soldiers pillaged the food reserves of the inhabitants of the cities and towns they passed through, to compensate for being so poorly paid. They spread terror, which touched off peasant revolts. These disruptions gradually decreased around 1690, after Louis XIV and Louvois, his Minister, created a system of barracks for quartering the soldiers and levied a tax to pay the troops. After this, the inhabitants felt secure and more willingly accepted the tax. They had not given their consent for the levy, but understood the need for it.
Dealers in fur and taxation in New France
Upon the arrival of the first European explorers, such as Christopher Columbus in 1492 and Jacques Cartier in 1534, North America was populated by Amerindian nations that had their own "taxation" system. Certain Native groups that served as intermediaries in the fur trade claimed a toll or a tax in kind when they conveyed pelt bales from one place to another. The Algonquins on the Ottawa River, for example, collected a percentage on furs, cornmeal, sunflower oil and medicinal herbs, in exchange for which they allowed travellers to portage in peace around the rapids. In 1636, the Jesuit Paul Le Jeune observed that this system, which he referred to as the "Law of the Land," was strictly observed by all Amerindian nations.
When Samuel de Champlain died in 1635, there were only about a hundred habitants from France living in the colony; among them were the families of Louis Hébert and Abraham Martin. At that time, Québec served primarily as a trading post and warehouse for the fur trade. Every year, merchant ships arrived from France to load their cargoes of beaver, marten and otter pelts collected by the Amerindians and transported by the coureurs de bois. In France, the mercantile companies resold the pelts to hatters and furriers, and had to pay the king a 25% tax (the "droit du quart") on their profits.
Taxation and the seigneurial system
Around 1637, to encourage French immigrants to settle in the St. Lawrence Valley, then known as "Canada," the king implemented the seigneurial system, by distributing large tracts of land to settlement agents called "seigneurs." These agents had to subdivide the tracts of land into lots or pieces of land, each measuring approximately three arpents of frontage by 30 arpents in depth. These lots were granted at no cost to new arrivals.
In return for this "free" land, a habitant was required to pay certain (admittedly minimal) annual fees, which constituted the income tax and consumption taxes of that era. These included not only the cens, which ranged from two to six sols per arpent, and the rente, which was usually 20 sols per arpent of frontage, but also, in many cases, goods in kind, such as a rooster or bag of wheat. In addition, a habitant wanting to graze farm animals on the common had to pay a few sols. To have wheat ground at the mill, a habitant paid the seigneur every 14th bushel of grain to amortize the cost of the building and pay the miller's salary or wages. Similarly, a habitant was required to give every 14th fish to the seigneur in exchange for permission to fish the waters bordering the habitant's land grant.
Beginning in 1670, tenants under the seigneurial system were required to remit a tax, or tithe, to the Church. The tithe, equal to 1/26th of the wheat crop, was used to maintain the religious buildings and property that the tenants used, such as the chapel, the rectory and the cemetery. Finally, the obligation to provide days of unpaid labour, dating back to the Middle Ages, remained in effect. A habitant was required to provide three to five days of unpaid labour each year to the seigneur for the maintenance of bridges and roads and for the construction of various buildings or structures, such as the manor house, the mill, barns, stables and fences. In return, the habitant had access to the seigneury's services and conveniences, and benefited from the security provided by the seigneury.
1763: the start of British rule
New France was turned over to England under the Treaty of Paris in 1763. At that time, and more specifically from 1791 on, the primary source of revenue for Lower Canada (Québec) was customs and excise duties on manufactured goods, wine, spirits and tobacco. In Upper Canada (Ontario), which has no seaports, revenue was derived from land (or property) taxes. Around 1835-36, members of the Patriot Party, including Louis-Joseph Papineau, arrived at the House of Assembly of Lower Canada dressed in "homespun" suits. Their intention was to boycott imported English fabric on which the customs tariffs continued to increase.
Beginning with Confederation in 1867, the federal government paid the greater share of the new country's expenditures for railroad construction, roads, canals, bridges and ports. It also claimed for itself the primary source of revenue, that is, customs duties. In addition, it created its own department of inland revenue, thereby becoming the first country in the world to have a separate department for the collection of revenue. The provinces obtained the power to levy direct taxes. Initially, however, they did not use that power, funding their meagre budgets with amounts remitted by the federal government, which were always found to be insufficient.
In the 1880s, faced with an urgent need to bail out its finances, Québec exercised its right of direct taxation, not on inhabitants but on business corporations, such as banks and insurance companies.
Personal income tax and sales tax were introduced in Canada in 1917, as temporary measures, due to the "extraordinary expenditures" related to World War I (1914-18). However, the end of armed conflict did not lead to their expected disappearance, because Canada's war debt totalled $2 billion. The economic crisis of 1929 and World War II (1939-45) did nothing to help Canadian finances recover and the history of "temporary" taxes repeated itself. All Canadians, including Quebecers, have therefore paid federal income tax since 1917.
In Québec, Premier Maurice Duplessis, a staunch defender of provincial autonomy, had the Québec National Assembly enact the Provincial Income Tax Act in 1954, to retain more spending power for the province. Since then, Quebecers have been required to complete two income tax returns, one federal and one provincial.
Conclusion: the present-day situation
By law, all taxpayers are equal when it comes to taxation. This does not mean that all are subject to the same tax rate, but rather that everyone that owes tax must pay it. The income tax rates are graduated according to taxpayers' different levels of income.
Tax evasion and the underground economy have replaced the salt smugglers (faux-sauniers) and pirate-smugglers of yesteryear. These offences call into question the fairness of direct taxation because the amounts not remitted by tax evaders must be borne by other taxpayers. The government has legal remedies to enforce tax legislation but these differ, fortunately, from the sanctions imposed in 1565 by the Parliament of London. The latter included cutting off the left hand of a person guilty of tax fraud and nailing it to the most visible place in Market Square!
Arpent
Unit of land measurement, that is, unit of length. An arpent equals 192 feet or 58.5 metres.
Bushel
Unit for measuring the volume of grain and other dry things. A bushel equals about 39 litres.
Cens
A nominal tax or land tax that replaced the "taille," which was a direct tax levied on individuals in France. New France settlers were also called "censitaires," derived from this word, which also relates to the word "census." The register in which the seigneur wrote the date and the amount paid each year by the censitaires was known as the "censier."
Common
Part of the seigneury belonging to the seigneur and including land reserved as pasture for animals.
Confederation
Under the British North America Act, 1867, previously separate British colonies became provinces united in a "dominion" called "Canada." Québec, Ontario, Nova Scotia and New Brunswick were Canada's first four provinces.
Excise
From the Latin word "accisia," means "tax." Originally, sales tax on wine, spirits and tobacco, which covered many Canadian and imported commodities.
Land
That which relates to land (property) and, by extension, to buildings. The land (or property) tax is an annual tax on land and property.
Portage
Carry a boat when navigation is impossible. Portage is required when travellers arrive at a watercourse that is impassable due to rapids, falls or dried-up areas, and bypass the watercourse on foot, through the woods, carrying all their baggage and their canoe on their backs.
Rente
Duty, royalty or tax paid in cash and, in many cases, with goods in kind.
Salt smugglers (faux-sauniers)
Individuals who smuggled salt to avoid paying the salt tax, or gabelle. As punishment, an estimated 500 of them were deported from France to New France in the 18th century.
Salt tax (gabelle)
The Latin noun "gabelum" means "salt tax." Before heading out to sea, every fishing boat had to load an enormous quantity of salt, since this condiment was the only means of preserving fish.
Seigneur
Any individual, whether nobleman or commoner, or any religious community to which the king granted a seigneury and which, in return, was required to pay the cost of bringing in settlers to clear the land for farming.
Sols
French money in the colony.
Tariff
Amount of duties and taxes payable. This word comes from the name of a Spanish fortress, Tarifa, from which the Moors set out to exact tribute from ships transporting goods through the Straits of Gibraltar.
Ardant, Gabriel. Histoire de l'impôt. 2 vols. Paris: Fayard, 1971 & 1973.
Dessert, Daniel. Argent, pouvoir et société au Grand Siècle. Paris: Éditions Fayard, 1984.
Linteau, Paul-André, et al. Histoire du Québec contemporain: Le Québec depuis 1930. Vol. II. Montréal: Les Éditions du Boréal, 1989.
Maitrot, Jean-Claude. "Impôt." Encyclopaedia Universalis. 2002.
Mathieu, Jacques. La Nouvelle-France: Les Français en Amérique du Nord, XVIe-XVIIIe siècle. Québec: Les Presses de l'Université Laval, 2001.
McIntosh, Dave. The Collectors: A History of Canadian Customs and Excise / Les receveurs: Histoire des Douanes et de l'Accise au Canada. Toronto: NC Press and Ministry of Supply and Services Canada, 1984.
Milton Moore, Albert, et al. The Financing of Canadian Federation: The First Hundred Years / Le financement de la fédération canadienne: Le premier siècle. 2nd ed. Canadian Tax Paper No. 43. Toronto: Canadian Tax Foundation, 1966.
Neurisse, André. Histoire de l'Impôt. Que sais-je? No. 651. Paris: Presses Universitaires de France, 1978.
Provencher, Jean. Chronologie du Québec, 1534-2000. Montréal: Les Éditions du Boréal, 2000.
