TheSalt Industry Commission was an organization created in 758, during the decline ofTang dynastyChina, used to raise tax revenue from thestate monopoly of the salt trade, orsalt gabelle. The commission sold salt to private merchants at a price that included a low but cumulatively substantial tax, which was passed on by the merchants at the point of sale. This basic mechanism of an indirect tax collected by private merchants supervised by government officials endured to the mid-20th century. The salt tax enabled a weak government to sustain itself; the government need control only the few regions that produced salt.[1] Plans to end the government monopoly on salt by 2016 were announced in 2014.[2]
Following theAn Lushan Rebellion (756–763) revenues from the land tax began to fall. Theequal-field system that sustained the land tax was undermined by the aristocracy andBuddhist monasteries acquiring large tracts of land, decreasing the amount of land which was taxable.[3] To compensate the statefound a new mechanism for the taxation of salt. In 758, ChancellorLiu Yan created a Salt and Iron Commission. Liu had already proved his worth by usingimpressed labor to dredge the long silted-overcanal connecting theHuai andYellow rivers; this project lowered transport costs, relieved food shortages, and increased tax revenues with little government investment. The Huai river ran through Northern Jiangsu, the location of coastalsalt marshes which were the major source of salt. Liu realized that if the government could control these areas, it could sell the salt at a monopoly price to merchants, who would pass the price difference on to their customers. This monopoly price was an indirect tax which was reliably collected in advance without having to control the areas where the salt was consumed.[1] The commission formed to oversee the new scheme was headed by the salt commissioner (yantie shi), a financial specialist, which was uncharacteristic of the Tang unspecialized political administration.[4]
Salt was to be sold only at regional offices by licensed producers, and then only to licensed merchants at marked up prices. The distribution by merchants ensured the effects of the policy penetrated into areas where the central government had limited authority.[4] The merchants then passed on the high cost of salt to consumers. Peasants were most affected as they spent a higher percentage of their incomes on basic food goods. By 779, taxation of salt quickly accounted for over half of government revenues.[4]
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