Russia continued to run sizeable budget deficits. Between i866 and i888, the budget was in surplus for three years, and in balance for a further two. Deficits ranged from i million roubles in i870 to 80 million roubles in i88i, with an average budgetary outcome across the period of i8 million roubles deficit annually. This did represent a considerable improvement on the pre-1861 period, when deficits averaged 45 million roubles annually in the thirty years after 1832, but it was only in the 1890s that the budget situation showed signs of consistent improvement. This situation was short-lived, however, since the budget returned to deficit in eight of the years between 1900 and 1913, averaging a deficit of 44 million roubles annually. This situation, while equivalent in cash terms to the level of deficit between 1831 and 1861, represented some improvement on that period, since the overall level of government spending had increased more than tenfold by the beginning of the twentieth century and the largest deficit in this period -386 million roubles in 1905 - represented 14 per cent of government revenue, in contrast to the average deficit of 16.8 per cent in the thirty pre-reform years. Improved performance during the i890s came through significant increases in revenues, outstripping expenditure growth by 15 per cent over the decade. This reflected Russia's healthy overall economic situation during this period, as increased economic activity generated higher income from taxation. This was assisted by changes to the structure of the taxation system that were introduced during the i880s.
The period of N. Kh. Bunge's tenure of the Ministry of Finance witnessed important shifts in the emphasis of the taxation system. The government shifted the balance of taxation away from direct levies and towards indirect taxation. The poll tax was gradually abolished between i883 and i886 but the government had to find other sources of income to compensate for the loss of the more than 50 million roubles of revenue that the poll tax generated annually at the beginning ofthe 1880s. Other direct taxes did not have sufficient potential to produce sufficient additional income. Revenue from the land tax barely grew during the 1880s and 1890s, remaining steady at some 6 million roubles each year. There was little scope to increase obrok significantly, although revenue from this source did increase from 33 million roubles in 1881 to 45 million roubles a decade later. Redemption payment revenue too remained steady at around 40 million roubles annually during the late 1880s and 1890s.[88] Attempts were made to increase the tax revenue from business by introducing an income tax, to add to the existing patent system of 1824 which gave merchants a licence to engage in a trade or industry in return for a fixed annual fee to the government.[89] In 1885 the government introduced a 3 per cent tax on business profits, increasing this to 5 per cent in i893 and, in i898, made the tax progressive. This proved to be an effective source of revenue, helping to more than double tax revenues from business between i884 and i895.[90]
The only other real opportunity for increasing revenue came from indirect taxation. The success of the government in gaining additional revenue from its alcohol monopoly has already been noted, but during the 1880s concerted efforts were made to enhance income from other sources. The existing taxes on tobacco and on sugar were increased, so that revenues from tobacco more than doubled between 1880 and 1895, while the income from taxing sugar showed a tenfold increase during this period. By 1895, taxes on sugar produced more than 47 million roubles annually, some 80 per cent of the revenue that the poll tax was producing in the last years before its abolition. The government also moved to introduce indirect taxes in new areas: oil and matches were both subject to new taxation from 1888, bringing in more than 27 million roubles annually by 1895. Stamp duties were also increased, resulting in a near-doubling of revenues from that source. The last area of indirect taxation where the government was able to increase its revenues was through customs duties. Tariffs produced close to 100 million roubles of revenue annually by 1880, but the government's policy of moving to increase duties on imported goods during the 1880s in order to stimulate domestic production resulted in an additional 40 million roubles of revenue by 1890. Bunge's successor as finance minister, I. A. Vyshnegradskii, put in place a major tariffreform in i89i and this accelerated the growth of revenue from this source so that in 1894 the government collected more than 183 million roubles from customs duties. This development of indirect taxation made Russia much more dependent on these sources of income than any of the other European powers. By i9ii, Russia gained 84 per cent of its revenues from indirect taxes, while indirect taxation in France accounted for 70 per cent of its budget and Britain's budget gained 59 per cent of its total revenue from this source.[91] This dependence on indirect taxation had serious consequences for Russia on the outbreak of war in 1914. In a fit of patriotic enthusiasm, the Russian government decided to introduce prohibition during wartime, but this brought about a severe and immediate reduction in the government's income, as it lost its income from liquor. Revenues in 1914 showed a reduction of more than 500 million roubles on the previous year, at the same time as the government was having to cope
with severely increased expenditure to fight the First World War.
***
The impact of Russia's budgetary policies on its population was considerable. Since the overwhelming majority of Russia's population were peasants, it was inevitable that they would bear the greatest burden of taxation. Discussions over the effect of government taxation policies on the peasantry have centred on two periods: the early part of the eighteenth century, when Peter the Great introduced the poll tax, and the post-emancipation period. While the Russian government's need for revenue was acute, and its apparent authority over its population was very considerable, it had to act with considerable caution when calculating the impact of its taxation policies. The threat of peasant rebellion - whether real or merely perceived - was ever-present and the government was well aware that its control of the empire could easily be challenged by uprisings across its domains. The four great peasant revolts that Russia experienced after i606, culminating in the Pugachev revolt in the i770s, reinforced this belief and acted as a reminder of the power that the Russian peasant could exert. While the state had been able to deal with these rebellions and to reassert its own authority on each occasion, the government became wary of implementing policies that could provoke the peasants into further revolts. This was especially true in the mid- and late nineteenth century, when the interests of noble landowners had to be balanced against the needs of the peasantry in the construction of the 1861 emancipation settlement. An increase in the number of peasant revolts in the i850s caused genuine alarm inside the government, and a nervousness about the potential power of the rural population played a significant part in the taxation reforms of the 1880s.
91
I. A. Mikhailov,