An Encyclopaedia on Chinese History, Literature and Art

The likin (lijin) tax 釐金

Jan 28, 2021 © Ulrich Theobald

The lijin tax 釐金 (厘金) – in the West known as "likin" (following the contemporary Chinese pronunciation) – was an internal tariff on the transport of goods introduced in the mid-19th century. It was originally earmarked for the treasury of the new armies and local militia recruited to fight the Taiping rebellion 太平 (1850-1864). In this way, it was a direct successor of the traditional way of financing war by contributions (juanshu 捐輸,, juanna 捐納), and was therefore originally called juanli 捐釐. In the context, the word li 釐 roughly means "penny".

In 1853, the Qing government 清 (1644-1911) set up headquarters (Jiangbei daying 江北大營) north of the Yangtse River from where the fight against the Taiping kingdom was orchestrated. For the military supplies, a contribution bureau was created in Lixiahe 里下河 close to Yangzhou 揚州, Jiangsu. It collected contributions from each landowner of the area as a certain percentage of the unified field-and-poll tax (diding yin 地丁銀). The amount was 20-80 wen 文 (qian 錢, cash, see Qing-period money) per mu 畝 of land (see weights and measures), depending on the fertility of the soil. Another target group of the contribution bureau were grain dealers (mixing shanggu 米行商賈) delivering to the villages Xiannümiao 仙女廟 (today part of Jiangdu 江都) and Shaobo Town 邵伯鎮. The bureau taxed each dan 石 (see weights and measures) of grain with 50 wen of contributions. From summer 1854 on, the taxation of grain trade was expanded to all villages of the surroundings, and also to other industrial professions. The average levy was 1 per cent on each commodity. By and by, the area of taxation was also enlarged, first to the city of Yangzhou itself, then to Tongzhou 通州 (today's Nantong 南通), Zhenjiang 鎮江 and Danyang 丹陽.

Until 1862, the levy was extended to all provinces of China – barring Yunnan and Heilongjiang, where it was introduced in 1874 and 1885, respectively. The reasons for the expansion of the likin system were on the one hand the intensification of the struggle against the Taiping, and the dire financial situation of many provinces. Introduced as a temporary levy in times of need, the likin tax became a regular tax of the late Qing period. Critics say it was an error to tax only domestic traders and not take into account the growing field of international trade. The likin tax made many Chinese commodities more expensive than foreign merchandise, and so reduced the competitiveness of Chinese products. Another shortcoming of the likin tax system was that it was not standardized throughout the empire, but each province could change or organize it according to need.

There were basically two types of likin tax, first the transit tax (xingli 行釐, huoli 活釐) and second the business tax (zuoli 坐釐, banli 板釐). The first was levied on the transport of goods by travelling merchants (xingshang 行商), the second on market transactions for the sales of goods by resident merchants (zuoshang 坐商) either on a marketplace or the store of a workshop. While the latter was only taxed for one transaction, the transit tax might be collected several times when passing a turnpike or other tariff barriers (qia 卡). Throughout the empire, there were different modes of how transported commodities were taxed. In some places, merchandise was taxed at the starting point and the point of destination.

Yet for the business tax, too, there were variations, like the pier tax (buli 埠釐), monthly levies at market gates (menshi yueli 門市月釐), shop contributions (pujuan 鋪捐) or establishment levies (luodili 落地釐). In some places, commodities were taxed before they were sold – mainly processed agricultural products like tea, silk or other fabric. Taxes on such commodities were also known as "levies on the hundred wares" (baihuoli 百貨釐). Of particular interest was the likin tax on salt (yanli 鹽釐, on top of the regular salt tax), foreign opium (yangyaoli 洋藥釐) and Chinese opium (tuyaoli 土藥釐).

In the last 50 years of the Qing empire, the general commodity tax (baihuoli) made out 92 per cent of the likin tax, while the tea tax (chashui 茶稅) made out just 1.8, the salt likin (yanli) 0.8, likin on foreign opium 3.3, and that on Chinese opium 2.1 per cent (Peng 1992).

In the first years after its introduction, the collection of the likin tax was organized by the military agencies like the grain office of the headquarters (junying liangtai 軍營糧臺), the logistics bureaus (junxuju 軍需局), or the supplies bureaus (chouxiangju 籌餉局). Thereafter, specialized likin bureaus were created, but without ever forming a homogeneous system. Even inside of provinces, the designations of the administrative apparatus were not uniform. On the provincial central level (zongju 總局) was the "Contribution Penny Bureau" (juanliju 捐釐局) of Song-Hu 淞滬 (Shanghai), the "Penny Contribution Bureaus" (lijuanju 釐捐局) of Jinling 金陵 and Tianjin, the "Broker Penny Bureaus" (yaliju 牙釐局) in Suzhou 蘇州 and the provinces of Zhejiang, Anhui, Jiangxi, Yunnan, and Hubei, the "Likin Salt-and-Tea Bureau" (lijin yan-chaju 釐金鹽茶局) in Hunan, the Likin Bureaus (lijinju 釐金局) in Guangxi, Shandong, Gansu, Sichuan, and Guizhou, the "Tax Likin Bureau" (shuiliju 稅釐局) in Fujian, the "Likin-Tax Bureaus" (lishuiju 釐稅局) in Shaanxi and Henan, and the Supplies Bureau (chouxiangju) of Shanxi.

The terms for the likin tax were manifold, reflecting the wide range of transactions taxed. There were loan contributions (jiejuan 借捐), assigned (?) contributions (zhijuan 指捐), field contributions (mujuan 畝捐), house contributions (fangjuan 房捐), shop contributions (pujuan 鋪捐), boat contributions (chuanjuan 船捐), salt contributions (yanjuan 鹽捐), rice contributions (mijuan 米捐), supply contributions (xiangjuan 餉捐), checkpoint contributions (qiajuan 卡捐), gunboat contributions (paochuan juan 炮船捐), dyke construction contributions (tigong juan 堤工捐), shop-sign penny contributions (banli juan 板釐捐), transit contributions (huoli juan 活釐捐), grass contributions (caojuan 草捐), reed contributions (ludang juan 蘆蕩捐), establishment contributions (luodi juan 落地捐), etc.

The rate of tariffs was also not uniform. In the early years, the Hubei tariff was 1.2 per cent on commodities, but 2 or 3 per cent in Hunan. Shanghai levied 3 or 4 per cent. Each province had its own statutes (zhangcheng 章程) regulating the height of taxation, but it seems that there was – as is the case with many other types of taxes or levies in China – a principal tax (zheng 正) and an additional amount (hao 耗) that originated in a compensation for transport losses in cases of taxation in kind. Over time, the likin tax was raised. In Anhui, for instance, a regular taxation on transported tea leaves was introduced in 1853, but in 1867, it was 2.7 times as high as in the first year.

Inside some of the provinces was a considerable number of sub-bureaus. In Jiangbei 江北 (northern Jiangsu and Anhui) for instance, were the two grain offices (liangtai 糧臺) of Jiangbei and Jiangnan 江南, the office of the Director-General of Tribute Grain Transport (caoyun zongdu 漕運總督), and the headquarters (junying 軍營) of general Yuan Jiasan 袁甲三 (1806-1863). These administrative instances even set up taxation spots outside of the region they were responsible for.

Below the central bureau were local bureaus (ju-qia 局卡) established at places of important business transactions, markets, or transport ways. There was also a differentiation between main bureaus (zhengju 正局, zhengqia 正卡) and branch bureaus (fenqu 分局, fenqia 分卡). In Guangdong, the term chang 廠 was used instead of ju 局. There were also special institutions entrusted with control, patrol and the fight against smuggling (fenxun 分巡, xunqia 巡卡), some of them equipped with boats (xunchuan 巡船) or even gunboats (paochuan 炮船).

Likin bureaus mushroomed all over the country. In the province of Hubei, there were 480 offices. Transport from Yangzhou to Huai'an 淮安, a distance of no more than 300 li 里 (150 km), required the passing of 8 likin offices. Between Suzhou and Kunshan 昆山, there were 4 taxation stops on a way of just 50 li (25 km). In former times, merchants transporting their commodities from Hankou 漢口 (Wuhan 武漢, Hubei) to Shanghai had to expect 6 taxation stops, while after the introduction of the likin tax, it was double that amount (Peng 1992). The highest number was reached during the early Tongzhi reign-period 同治 (1856-1875), with ca. 3,000 bureaus. In the late years of the Qing empire, there was a total number of 2,236 likin tax bureaus nationwide. This number required substantial spending for personnel, but on the other hand, allowed those employed in the system to enrich themselves. According to a common saying, a sub-official employee at the bureaus (liju chai 釐局差) "earned more than an district magistrate or even a prefect acting on a vacancy (shu que 署缺)", expressed in numbers 3,000-5,000 or even up to 10,000 liang p.a. (see Qing-period money; Peng 1992).

It is still not easy to assess the revenues of each province in 19th-century China because the provincial governors or the administration commissioners were not obliged to draw up official annual accounts. Yet various archival documents allow for a reconstruction in many cases. The lowest likin revenue among the provinces in 1864 was 13.6 million liang, and the highest one 19.83 million (Peng 1992). This was 3 to 4 times as much as the income of the central government during the early Qing period. On the other hand, expenditure had grown tremendously over time, for various reasons. The Qing government could not do without the additional revenue from this new kind of tax. After the suppression of the Taiping and various other local rebellions, taxation relaxed somewhat, but intensified when needed. In 1903, for instance, the likin revenue of all provinces was 11.7 million liang, but rose to 43.18 in 1911 (Peng 1992).

Because the likin had been introduced as a temporary means to finance the military campaigns against the Taiping rebels, many ministers deemed it obsolete when the Taiping were defeated, and suggested to the Tongzhi Emperor 同治帝 (r. 1861-1875) to abolish it, but to no avail. The tax had become a welcome instrument to fill the state coffers in hard times, particularly when China had not just to reconstruct the economy in the southeast, but also to pay reparations and war indemnities to foreign powers, and to return loans to foreign banks and governments. Even the various Republican governments retained the likin tax as a substantial part of the provincial and local revenue. It was therefore abolished as late as 1 January 1931.

Beal, Edwin George Jr. (1958). The Origin of Likin, 1853-1864 (Cambridge, MA: Harvard University Press).
Luo Yudong 羅玉東 (1936). Zhongguo lijin shi 中國釐金史 (Shanghai: Shangwu yinshuguan, 1936; repr. in Jindai Zhongguo shiliao congkan xubian 近代中國史料叢刊續編, series 62, no. 612, vols. 6-7).
Peng Zeyi 彭澤益 (1992). "Lijin 釐金", in Zhongguo da baike quanshu 中國大百科全書, Part Zhongguo lishi 中國歷史 (Beijing/Shanghai: Zhongguo da baike quanshu chubanshe), Vol.Ⅱ, 545.