There are 3 types of taxation in the city states.
1. Income - City treasury will receive a percent of sales from both NPC vendors in town as well as Player vendors. You can set the tax rate by using the city stone or guild tab.
2. Citizen - Tax any citizen that is part of the town. Tax can be from 1-10000. One a week, on city update, system will check to see if citizen have the proper amount of taxes to be paid and deduct those from the player account and place it in the the city treasury. If citizen does not have the funds to cover the tax, back taxes will be applied. Once the tax dodger logs in, the system will check his account. If funds are available it will remove them and place them in the city treasury. If not, backtaxes will remain and even increase over time. Inactivity does not dismiss a citizen from their obligation and civil duties.
3. Travel - When the city state sets up a moongate they are able to draw tax revenue from the people who use it. Tax 1-10000