Taxation in Spanish Philippines

Before the arrival of the Spaniards, our ancestors were mainly involved in a subsistence
economy. Their form of taxation is essentially different from the contemporary concept wherein
they were obliged to offer something to their datus from what they had produced and they
must provide labor services. When the Spaniards came, they introduced the payment of
tributes to the Filipinos for the purpose of development and improvement of the islands and for
the maintenance as well. Due to low tax collection, they implemented the system of reduccion
wherein people were forced to relocate in the pueblos (small Spanish town) to gathered and
awarded plots of land to till. This was managed by an encomenderos who had given the rights
to control and took over the land, as well as the collection of payment of tributes. Exempted
from the tributes were the principales and the vagrants. In order for the Filipinos to pay for the
tributes, they need to increase their production. Later on, half of the tribute was paid in cash
and the rest with produce.

In sixteenth (16th) century, the Manila-Acapulco trade was established through the use of the
galleons. This improved the economy of the Philippines and reinforced the control of the
Spaniards all over the country.

In 1884, the payment of tribute was replaced by a poll tax called the cedula personal which
was required from every resident to carry all the time. It was progressive, however it was a
heavy burden for the peasants and was easy for the wealthy.

There were two (2) direct taxes imposed in 1878 on urban incomes. These were the Urbana
Tax and the Industria Tax that were universal and affected all kinds of economic activity
except agriculture. There were also indirect taxes imposed on exports and imports of the
products. The monopoly of tobacco gained most income among the other monopolies because
it lasted for a century (1781-1882) and it contributed to the economic growth of the Philippines.

Through the polo system, male Filipinos were obliged to serve, a burden that resulted in an
increase in death rate and flight to the mountains, which led to a decrease in population in the
seventeenth (17th) century. This changed later on as polos and servicios became lighter, and
was organized at the municipal level. They may opt out by paying the fallas of three (3) pesos
per annum, but it was usually lost due to corruption by the principales. That is why taxation in
the Philippines during the Spaniards was characterized by heavy burden among the Filipinos
because it made the rich richer and the poor poorer.

Primary Source: Mariano Herbosa Writes to Rizal About Taxes

This pertains to the letter of Mariano Herbosa to Jose Rizal which was the evidence to the
unfair and unlawful taxation system of the Spaniards. Herbosa was the brother-in-law of Rizal
and the husband of Lucia Alonso Rizal. On his letter, he said that there were many kinds of
taxes which were collected by the Spaniards. There was a land tax, residential tax, and a tax
per crop.

In land tax, the rate of the tax was based on the type of land where the crops were planted, the
kind of crop that was planted, and how much crop was being harvested. They will increase the
tax if they will see that the harvest is good, but don’t decrease it if the harvest is poor. In
residential tax, the basis will be the structure of the houses. If a stone wall is added with only
one span, 50 pesos must be paid, the lowest will be 20 pesos. But a nipa or cogon house pays
only one peso for an area of ten (10) fathoms square. The taxes of the crops were also
different. The tax on the palay was separate from the tax on maize, mongo, garlic, and other
crops.

In all of these taxes, there were no receipts presented in every payment that has been made.
If there is any, it only states that the tax for that year was paid, without stating its amount paid.
It only bears their name, but it has no signature in the place where the amount ought to be
paid.

The main characteristics of taxation in the Philippines during the Spanish colonial era were the
oppressive taxes levied on the native population and the corrupting of the principales, or
former datus and local elites, who were co-opted by the Spanish to rule and enslave the locals
on their behalf. By keeping tributos and fallas for themselves, the principales who were
granted posts in the local administration, such as alcaldes or cabezas de barangay, were able
to profit themselves while the peasants were left to suffer mistreatment. Despite the
appearance of progressive taxation, the affluent got richer and the poor got poorer due to the
difference between the severely taxed peasants and the less taxed mains.
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Social Science 103

Chapter 4: Social, Political, Economic, and Cultural

Issues in Philippine History

Taxation in Spanish Philippines

Summary

Prepared By

Nellen C. Remedio
BSBA 2-A

Submitted To

Ms. Samantha Y. Lawas