Tax in Kind

in the USSR, a fixed tax on peasant households payable in food. It was instituted by a decree of the All-Russian Central Executive Committee on Mar. 21, 1921, to replace the surplus appropriation system. The transition to the tax in kind, the first step of the New Economic Policy, was a necessary economic stimulus for the improvement of agriculture. The peasants knew in advance how much output would have to be turned over to the state. The amount of the tax in kind was significantly less than the amount of food that had been requisitioned under the surplus appropriation system. Whereas in 1920–21 under the surplus appropriation system the peasants turned over 367 million poods of grain to the state (1 pood= 16.38 kg), in 1921–22 the tax in kind was 240 million poods.

In the first year of the tax in kind, a large amount of grain and other food products was left at the disposal of the peasant households. This gave the peasants a greater economic incentive to develop their farms, expand sown areas, increase herd size, and raise crop yields. The tax rates levied for each type of agricultural product depended on local conditions and the prosperity of the peasant households. The Soviet state used a system of progressive taxation: the highest rate was established for kulak households.

In March and April of 1921, decrees of the Soviet government established taxes in kind on grain, potatoes, oilseeds, eggs, dairy products, wool, hides, linen and hemp cloth, and tobacco. Utilization of agricultural products in the national economy after the payment of the tax in kind was to be achieved by exchanging such products for industrial goods needed by the peasants, that is, by exchanging goods between the city and the countryside and between industry and agriculture. Every possible encouragement was given to the development of small-scale industry in order to expand trade and create the necessary conditions for the development of farming and industry, and on this basis to accelerate production.

The tax in kind was an important step in the transition to the exchange of agricultural goods for industrial ones. The tax revitalized trade and created completely new economic relations between the peasants and the working class, thus laying a stable foundation for a political and economic alliance between these classes.

According to a decision of the Twelfth Party Congress (April 1923), a single direct agricultural tax was introduced to replace the tax in kind and other taxes and dues in the countryside. This decision was implemented by a decree of the All-Russian Central Executive Committee and the Soviet of People’s Commissars of May 10, 1923. After sound currency was instituted in the USSR in 1924, this tax was collected in monetary form.