Government Reform of Peter The Great - Finance and Trade

Finance and Trade

Fighting the Great Northern War required unprecedented economic resources, and Russia's yawning budget deficit and aging infrastructure meant that the state could not effectively allocate resources and money in wartime. Peter's government was constantly in dire need of money, and at first it responded by monopolizing certain strategic industries, such as salt, alcohol, oak, and tar. Peter also taxed many Russian cultural customs (such as bathing, fishing, beekeeping, and wearing beards) and issued tax stamps for paper goods. However, with each new tax came new loopholes and new ways to avoid them, and so it became clear that tax reform was simply not enough.

The solution was a sweeping new poll tax, which replaced a household tax on cultivated land. Previously, peasants had skirted the tax by combining several households into one estate; now, however, each peasant was assessed individually for a tax of 70 kopeks, paid in cash. This was significantly heavier than the taxes it replaced, and it enabled the Russian state to expand its treasury almost sixfold between 1680 and 1724. Peter also pursued proto-protectionist trade policies, placing heavy tariffs on imports and trade to maintain a favorable environment for Russian-made goods.