As is my understanding (this is not my specialty), for the vast majority of history the crown (whatever sovereign entity exists at the head of the state) gathered income through a few means:
- Tariffs (relatively easy to implement, but don't work for domestic goods)
- Stamps (also relatively easy to implement, but hard to balance with cost of doing business across businesses)
- Royal charters (this also effectively covers any centralized licensing system)
- Feudal tithes (and then the sovereign entity becomes someone a little closer, but the same problems ensue)
The problems with these methods is that they have a cooling effect on growth. Royal charters in particular prevent people from investing capital and creating businesses to fill a market need. Feudal tithing engenders mismanagement by feudal lords. Tariffs in a low-technology environment are easy to circumvent (hence the whole smuggler occupation). Uniformly priced stamps make small transactions prohibitively expensive.
The state has need of capital for various uses (defense, civil order, public works, etc.). So it needs some taxation system. What is the minimum level of technology necessary to implement a basic form of a modern tax system (be it VAT or income)? How would it be circumvented? How would it be enforced?
Edit: I should be clear that I'm trying to avoid taxation schemes that will obviously lead to mismanagement /undue pain on the populace. Things like selling of tax collection licenses encourages legbreakers.
Its obviously true that any tax is going to have a cooling effect on growth (Assuming that tax money isn't being spent on public good). But some tax systems are worse about this than others. Let's consider an optimal tax as that which causes the least pain in the populace per unit revenue.