In Roman Asia Province, more than in any other part of the late republic, tax farming brought great grief to the populace. In our current read, The Grass Crown, both Mithridates and Gaius Marius in his Asian travels are told about this problem, the latter by Rutilus Rufus, then legate to the governor Quintus Mucius Scaevola. These two officials exposed the scandal and rectified the situation, to the dismay of the equites tax farmers back in Rome. Scaevola survived relatively unscathed, but Rutilius Rufus, lacking connections, was tried for and convicted of extortion and had to go into exile. For this he choose the very place of his alleged crimes, Asia Province, where he was warmly welcomed and spent the rest of his life. More on this from Mommsen in my earlier post.
Definition of tax farming, from Tax World:
Tax farming is the principle of assigning the responsibility for tax revenue collection to private citizens or groups. Tax farming occurred in Eygpt, Rome, Great Britain, and Greece. The principle was considered very effective for tax revenue collection but suffered from a tendency of the tax-farmers to abuse the taxpayer for collection. Only when the system included checks and balances for the tax-farmer as well as the taxpayer did the system seem truly successful. The publicani of Rome were known as some of the most abusive tax-farmers. Tax farmers bid at auction for the contract rights to collect a particular tax and was held responsible for any loss. In Eygpt taxes for collected very effectively without tax farmers until the Greek Ptolemies set up rule. Under the Ptolemies the tax-farmer watched over the taxpayer and the government tax collector to prevent the scribes from imposing lighter taxes on the poor and unfortunate.
Love to Know 1911 Encyclopedia Britannica writes on Publicani:
PUBLICANI, literally men employed "in connexion with the revenue," (publicum, from populus, people), or possibly "in the public service," the name given in ancient Rome to a body of men who either hired state property or monopolies for a certain period, during which they could farm such property to their own profit, or bought of the state for a fixed sum the right to farm for a term of years the taxes due to the treasury from the public land in Italy (see Agrarian Laws) or the land held by Roman subjects in the provinces. In very early times the senate entrusted to officials appointed for the purpose the control of the sale of salt (Livy ii. 9); and it was a natural development from this that the state, instead of appointing officials to manage its monopolies, should let out those monopolies to individuals. A regular system was soon established by which the censor, who held office every fifth year, placed all the sources of public revenue in the hands of certain individuals or companies, who on payment of a fixed sum into the treasury, or on giving adequate security for such payment, received the right to make what profit they could out of the revenues during the five years that should elapse before the next censorship. The assignment was made to the highest bidder at a public auction held by the censor. The same system was applied to the public works, the publicanus (or company) in this case being paid a certain sum, in return for which he took entire charge of a certain department of the public works, and winning his appointment by making the lowest tender. That this system was well established at the time of the Second Punic War is assumed in Livy's account of the various offers made by the wealthier class of citizens to relieve the exhausted treasury after the battle of Cannae. On the one hand we have companies offering a price for branches of the revenue which was calculated rather to meet the needs of the state than to ensure any profit for themselves (Livy xxiii. 49). On the other hand individuals are represented as undertaking the management of public works on the understanding that they will expect no payment until the conclusion of the war (ibid. xxiv. 18).
Ernst Badian has written an excellent book on tax farmers: Publicans and Sinners: Private Enterprise in the Service of the Roman Republic with a Critical Bibliography.
For German speakers, the German version, Zöllner und Sünder: Unternehmen im Dienst der römischen Republik, ISBN 3534131436, translation supervised by the author, can be found on the used book market in the US, and at amazon.de.
A newer book is Banking and Business in the Roman World (Key Themes in Ancient History) by Jean Andreau. Bryn Mawr Review.
There are the inevitable comparisons – especially by libertarians – to the modern U.S., which I will not bother with, and an article by Bruce Bartlett, How Excessive Government Killed Ancient Rome, in the Cato Journal, with a lenghty bibliography.