Land Tax Reform (Japan 1873)

However, difficulties arose with the honesty of the measuring system when the 1874 budget showed that collected taxes fell far below projected values.

The government responded by establishing a land tax reform department in 1875, and began aggressive efforts to install the system.

The department's aggressive system continued through 1878, but the strictness of rules gradually decreased as it became clear that required amounts would be met.

As mentioned earlier, taxes were paid in rice and crops until the end of the Edo period, and the cultivator was held as the taxpayer under the previous system.

The reform abolished this archaic system of land ownership, and began to allow landowners to use their property as a financial asset in collateral or other investment.

This law was one of the first steps towards the development of capitalism in Japan, paralleling the English (and later United Kingdom) statute Quia Emptores enacted several centuries earlier.

Prior to the enactment of the land tax reform, the unilateral ban on trading and selling farmland was rescinded in 1872, and the use of real estate as collateral for agricultural loans was legalized in 1873.

In the previous system, rice and crops collected from each fiefdom were sold and distributed by wholesale dealers via daimyō storehouses in Edo or Osaka.

The reform allowed farmers to sell their crops for cash directly to local merchants, and had a large effect on Japanese commerce.