From The Art and Popular Culture Encyclopedia
The Ferme générale was, in ancien régime France, essentially a franchised customs and excise operation which collected duties on behalf of the king, under 6-year contracts. The major tax collectors in that tax farming system were known as the fermiers généraux (farmers-general in English).
Before the French Revolution, the public revenue was based largely on taxes known as:
- the taille – direct land tax imposed on French peasant and non-noble households, based on how much land they held.
- the taillon – a tax for military expenditure
- the vingtième (one-twentieth) – based solely on revenues (5% of net earnings from land, property, commerce, industry and from official offices)
- the gabelle – a system of salt taxes
- the aides – national tariffs on various products (including wine and tobacco),
- the douane – a local tariff on specialty products
- the octroi – a local tariff levied on products entering towns
- a local tariff levied on products sold at fairs
- the "dîme" – a mandatory tithe to support the church (and so, not formally a tax).
Tax farming before Colbert
The Ferme générale developed at a time when the monarchy suffered from chronic financial difficulties. The Affermage (leasing, outsourcing) of the collection of the traite (customs duties and taxes) had the advantage of guaranteeing the Treasury foreseeable and regular receipts, while reducing the perception of its role in tax-collection. The rights were initially contracted separately to various tax farmers, who were named traitants (who had the right to collect the traite) or partisans (who had a share in the collection of the traite). They were obliged to pay to the royal Treasury the sum stipulated in their lease, and they received a share of the income and a share of any unexpected surplus. Each right was leased separately, which caused great administrative complexity: the taking of goods out of bond could involve several tax farms. Prior to 1598, this system had developed so that the tax farms were allocated among five pays (provinces).
In 1598, Sully entrusted tax collection to one farm, instead of five and he subjected the collection of duties raised in the provinces to the rights of the King. The single tax farm was called the Cinq Grosses Fermes (five large farms). In 1607, he issued new rules (Règlement Général sur les traites) on the collection of duties in an attempt to harmonize procedures. He also attempted to constitute the whole of France into a single customs area and gather together, but without success, the provinces considered foreign into the zone covered by the Cinq Grosses Fermes. In the middle of the 17th century, France was divided for tax purposes into three principal zones:
- the provinces of the Cinq Grosses Fermes,
- provinces considered foreign and therefore had negotiated lower rates on some taxes, and
- provinces effectively following the example of the provinces considered foreign, which formed free zones.
The farm under Colbert: traitants and partisans
The process was further developed under the aegis of Jean-Baptiste Colbert Minister of Finance to Louis XIV. To reduce the number of these farmers and to increase the share of the collection transferred to the Treasury, Jean-baptiste Colbert sought to gather a great number of rights together in fermes générales (general farms). The first fermes générales was instituted in 1680 to collect gabelles, aides, taille and douane .
Although sometimes of obscure origin, the financiers which took these rights often quickly accumulated immense fortunes which enabled them to play a significant political and social rôle. Their greed and excesses shocked public opinion and were turned into objects of ridicule in literature, for example by Alain-René Lesage in Turcaret, which was inspired by Paul Poisson de Bourvallais.
The Ferme générale (1726-1790)
In 1726, all the existing farms were gathered in a single lease. The forty farmers general, who went guarantee of the contractor of the lease, became powerful characters and fabulously rich persons. Among the representatives of the first generation of these tax farmers were Antoine Crozat (?) or the Pâris brothers.
Criticisms of the Ferme générale led the government in 1769 to introduce a system of regulation, into which the collection of taxes and the administration of the service to which the tax were entrusted to public organisations, with managers receiving a fixed remuneration.
In 1780, at the initiative of Jacques Necker indirect taxes were distributed between three tax farm companies: the Ferme générale (customs duties), the Ligue générale (taxes on alcohol) and the Administration générale des domaines et des droits domaniaux(land taxes and fees on land registration).
At the end of the 18th century, the Ferme générale had become the symbol of the inegalitarian society. The Ferme générale, with its colossal fortune, appeared to encapsulate the perversion of the political and social system. People blamed the injustices and the annoyances on the company, which actually arose from the complexity of the tax system, the brutality of the guards of the troops and the brutal repression of fraud and smuggling. The gabelle was the most unpopular of the taxes.
The Ferme générale was thus one of the institutions of Ancien Régime which were most highly criticized during the French Revolution and were depicted as birds of prey and tyrants. The Ferme générale paid the price at the scaffold: 28 former members of the company were guillotined on 8 May 1794, including the chemist Antoine Lavoisier. The Ferme générale was suppressed in 1790.
The lease of the Ferme générale was concluded under 6-year contracts between the King and an individual who was a figurehead got the company. The Ferme générale went guarantee for the contractor. Their number of partners was fixed at 40, after having reached nearly 90 earlier. The contractor committed himself to paying the Treasury the amount of the lease and received in return any surplus. An upper limit was set for this remuneration from 1780.
The Ferme générale had its headquarters in Paris. It employed in its central offices nearly 700 people including two chaplains. Its local operations included up to 42 provincial offices and nearly 25,000 agents distributed in two branches of activity; that of the offices which checked, liquidated and charged the fees; that of the brigades which sought and suppressed smuggling with very severe punishments (such as hard labour or hanging).
The employees of the Ferme générale were not royal civils servants, but they acted in the name of the king and therefore benefitted from particular privileges and the protection of the law. The guards of the service of the brigades moreover had the right to bear weapons.
The direction of the company was insured collectively by the Ferme générale. They met as committees of experts and had control of the external services.
The day before the French Revolution, almost all the rights of drafts and rights indirect (gabelle, tax on tobacco and a number of local taxes) were awarded.
The income from the Ferme générale represented more than half of the public revenue.
The company built the Wall of the Farmers-General between 1784 and 1791 to ensure the payment of taxes to the Ferme générale on goods entering Paris.
Anticipation of the modern tax collection methods
The internal organization of the Ferme générale is regarded today as the administrative system that was most equitable and most modern of the Ancien Régime. The Ferme générale was useful, in its administrative operation, as a model for the tax authorities of the 19th century.
When the vocabulary is brought up to date: outsourcing, instead of the obsolete expression, leasing, it fits even in the liberal calls for small government. For example the provision of public utilities are often outsourced, for instance the management of the supply of drinking water and street-cleaning services. It saves on the cost of raising and administering taxes.
However, the same criticisms that were made in relation to the Ferme générale can be made of modern outsourcing:
- public bodies were deprived of a resource;
- the service rendered was not always better in the long term;
- the cost could be higher for the taxpayer, who paid his taxes plus the margin taken by the Ferme générale ;
- the recovery of debts (of tax arrears) by the Ferme générale could be brutal;
- depriving itself of a resource, the community became involved in debt, and had to find new taxes to obtain additional money.
Thus at the end of the 18th century, the French State had become involved in considerable debt and this was a factor in the French Revolution.