The State and the Economy
The main fiscal instruments the Roman government could use to affect economic behaviour and performance were currency, taxation, and regulation of markets. This chapter is primarily concerned with taxation, and considers the central features of the relationship between direct and indirect taxation and trade, taking Hopkins’s taxes-and-trade model as a point of departure. It argues that, before AD 300, taxation was fairly low, but not as low as Hopkins thought, when we consider the things he omitted. Various fiscal stimuli, the government use of coin, and taxation all affected trade positively in different ways. After Diocletian, by re-establishing the currency as central to government fiscal operations and by reducing the transaction costs that fell directly upon central government, rates of taxation could effectively be lowered without significant loss of revenue, and that institutionalization of the relationship between imperial and municipal taxation was broadly beneficial from a fiscal viewpoint.