Alcabala facts for kids

The alcabala was a special sales tax used by Spain a long time ago. It was one of the most important taxes the Spanish kings collected. This tax was used in Spain and its colonies.

The alcabala could be as high as fourteen percent. Unlike many other taxes back then, almost everyone had to pay it. Even rich nobles and church leaders paid, though sometimes the clergy got special breaks for trade not meant for profit. Some towns were also given tax breaks at different times.

What's in a Name?

The word "alcabala" comes from the Arabic word alqabála. This Arabic word means "contract" or "tax."

Sometimes, people used the plural term, las alcabalas. This term could also include other taxes that were similar to the alcabala.

How the Tax Worked

The alcabala was the most important tax for the Spanish kings. It was first put in place in 1342. Another important tax was the diezmo, which was a tithe (a part of income) that supported the Catholic Church. A big part of the diezmo also went to the king.

The amount of the alcabala tax changed over time. It could be as low as two percent or as high as fourteen percent. The tax was not the same everywhere. Different parts of the Spanish empire had different rates. Also, some goods were not taxed, like basic food items.

Sometimes, the government would let a city or a group of merchants collect the tax. These groups would pay a fixed amount to the Spanish treasury. This was called "tax farming." Some specific items were also exempt, like horses, hunting birds, and books.

Unlike today's sales taxes, the alcabala was charged every time an item was sold. For example, if grain was sold, then made into flour and sold, and then made into bread and sold, the tax could be charged at each step. Eventually, baked bread was made tax-free.

The tax rate changed many times. In 1341, it was five percent. It went up to ten percent in 1491 but dropped back to five percent in 1539. By 1793, it reached fourteen percent in some places in Spain. That same year, it was lowered to seven percent. It seems the tax was not always fully collected, especially in smaller villages.

Collecting the Alcabala

In the 15th century, governments didn't have large offices to collect taxes. So, "tax farming" was common. This meant that private groups or cities collected the tax. Because rates were different in different areas, where a sale happened was important. If goods were moved to another place to avoid the tax, there was a big fine. There were rules about moving goods between towns.

Sellers were supposed to tell the tax collector about sales within two days. They had to pay the tax within three days. If they didn't, they could face a big fine. Sellers could also arrange to pay a set amount regularly instead of paying for each sale. Buyers were also supposed to report sales. This helped check on the sellers. If the seller was from outside the area, or was a powerful person, the buyer had to report the sale beforehand. The buyer could be held responsible if the seller didn't pay the tax.

History of the Alcabala

The exact start of the alcabala is not fully clear. It might have begun during the time of Muslim rule in Spain. But we know that in 1342, King Alfonso XI of Castile convinced the Cortes Generales (like a parliament) to make it a royal tax for Castile. At first, the tax was only supposed to last for three years. However, it was extended many times for wars and maintaining castles. Finally, in 1393, it became a permanent tax.

Queen Isabella I thought about putting the alcabala tax on Spain's American colonies as early as 1503. But it wasn't actually used there until the late 1500s. It started in Mexico in 1574 and in Peru in 1591. Often, the contracts given to people who conquered land for Spain included a period where they didn't have to pay the alcabala. For example, Peru was supposed to be tax-free for a century, but the king started collecting it sooner.

The alcabala caused disagreements in Quito when it was first put in place in the 1590s. It also led to a protest there in 1765. In that case, the viceroy (a high-ranking official) wanted to collect the tax directly instead of using private tax collectors. An increase to six percent in the late 1770s led to protests in northern South America and southern Peru in 1780-1781. Even though these rates caused protests, the tax rates in the Americas were usually lower than in Spain. This was around the same time that tax disagreements also led to the American Revolution in what is now the United States.

In the late 1700s, the alcabala brought in a lot of money. It generated 2.5 million pesos each year in Mexico and 600,000 pesos in Peru.

The alcabala tax was finally ended in Spain in 1845.

Another Meaning

The word alcabala is also used in Colombia and Venezuela. There, it refers to military checkpoints.

See also

In Spanish: Alcabala para niños