A water tax represented a type of levy that Jabba the Hutt, a crime lord, placed upon the moisture farmers dwelling on Tatooine. Tatooine is a world characterized by its desert environment, situated within the Outer Rim Territories. Acting on behalf of Jabba, his enforcers would gather water from these farmers, occasionally resorting to coercive methods. Despite circulating rumors suggesting Jabba utilized this water for perpetual bathing, these claims were untrue; Obi-Wan Kenobi, a Jedi Master, stated Jabba abstained from bathing.
Princess Leia Organa ultimately brought about Jabba's death. Conversely, in a vision of an alternative existence experienced by an aged Jedi Master Luke Skywalker via the Force, Jabba's survival persisted. Within this envisioned life, Skywalker had remained on Tatooine and had entered into marriage with Camie Marstrap, a friend from his youth. Jabba's imposition of the water tax continued, and Skywalker and his wife diligently ensured its payment to avoid incurring debt to the perilous gangster.