9724 Part 2
Thus, the protection of the tax-base (or productive-base) and its
augmentation become the first principles of taxation. In the next sloka,
this is expanded upon “That which would enable the King to perform his
functions of looking after (the welfare of people) and traders to remain
with the fruits of their trades, this, having been well-considered, the
King should levy a tax”.
“The tax should be annual, and that it should be collected by reliable
functionaries. In collecting the tax, the King should be fair between his
subjects, as fair as a father, between his sons”.
The King should never overtax. Taxation should never be detrimental to
the spontaneous growth of the tax base. Metaphors of a leech, bee and calf
are used to bring this point home. In this example, it has been suggested
that the amount drawn is always too small to be detrimental to the growth
of the base. Similarly, taxation should be moderate enough to be conducive
to the growth of the tax-base. Further on, in the same chapter, a warning
is issued against excessive tax-greed that will destroy the productive base
of the system. It has been stressed that, if the king’s servants, connected
with the government of the realm, are often found to be exacting and
deceitful; the king shall protect his subjects from (the exactions of)
these officials.
“The king shall excommunicate from the country corrupt officials, who
would receive undue gratifications form suitors (at their courts) and
confiscate their goods as well”.
“Maids, messengers, and menials, engaged in the king’s service, shall be
daily paid their wages at varying rates according to the nature of their
posts and services”.
“Taking into consideration the bought-price as well as the sale-price
of his goods, the cost of conveyance, the costs of his daily living, and
other contingent expenses, as well as the cost of ensuring safety to his
goods (Yoga-Kshema), the cost of policing the forests, rivers, hill passes
etc., he shall levy taxes on merchants”.
“The king, after due deliberations, shall always impose taxes on profit
of traders and cultivators, as well as on those of the state”.
Based on religious sanction, the ruler’s right to levy taxes and
contributions, and the obligation of the people to pay them on an implied
contract between the state and the subjects, had important corollaries. The
right to tax solely rests on the state’s discharging its appointed duties.
“A king who (duly) protects (his subjects) receives from each and all
the sixth part of their spiritual merit; if he does not protect them, the
sixth part of their demerit also (will fall on him)”.
“Let the king take one-twentieth of that (amount) which men, well
acquainted with the settlement of tolls and duties (and) skilful in
(estimating the value of) all kinds of merchandise, may fix as the value
foreach saleable commodity”.
“Once in five nights, or at the close of each fortnight, let the king
publicly settle the prices for the (merchants)”.
“All weights and measures must be duly marked, and once in six months
let him re-examine them”.
“Let him daily look after the completion of his undertakings, his beasts
of burden, his carriages, (the collection of) his revenues and
disbursements, his mines, and his treasury”.
Commenting on the scheme of things in Manu smriti, great British
scholar Sir Monier Williams argues that according to European standards,
it is an unsystematic compilation of previous sources instead of being an
orderly codification of national statutes and customs. He goes on to say
that by blending civil and criminal law with religious, moral, and
ceremonial precepts and philosophical doctrines and metaphysical theories,
the so-called code of Manu confounds the ordinances of government with the
obligations of religion, domestic life and private morals.
e) PUBLIC FINANCE IN SHUKRA NITISARA
Period of Shukra-nitisara is rather uncertain. Yet it is a very
important work of ancient Indian polity as it does not limit itself with
theoretical discussion but gives a more detailed picture of the
administrative machinery. Besides discussing the duties of the king and
functions of his ministers and officers, the work describes the problems of
foreign policy and methods of warfare. Civil administration is described in
detail. We get account of judicial administration also. Vivid detail of the
seating arrangement in the royal court on formal occasions and different
grades of feudatories is also described. The portfolios and working of the
ministry with the assistance of the secretaries under the control of the
king is found. Only Sage Shukra has prescribed the judicious percentage of
the state income, to be spent on different items. Details of army
administration, recruitment, their training, salaries, identification of
martial types of elephants, horses, and manufacturing of weapons, are also
found. Four maxims of taxation viz of equality, of certainty, of
convenience and of economy have been prescribed by Adam Smith in his
celebrated book, ‘The Wealth of Nations’ (1776). Most of these canons
already found a place in Shukra-nitisara. It has been stated that- The king
should collect funds by hook or by crook, thereby maintaining the
commonwealth and the army as well as sacrifices. The collection of treasure
is for the maintenance of the army and the subjects and for the performance
of sacrifices. This leads to the king’s happiness in this life and
thereafter; otherwise, it leads to misery Shukra Nitisara prescribes that,
> in normal times the king should not increase his treasure by augmenting
punishment, land revenues and duties, but by taking dues from holy places
and properties consecrated to divine purpose. For maintenance of army, he
should collect special fines and duties, etc. Enhanced collections be made
only under exceptional circumstances. The king should receive the wealth of
the rich men in times of danger by supplying them place to live. But when
he is free from danger, he should return the amount to them together with
interest. Loans are prescribed from rich people in difficult times. These,
however, should be repaid as soon as the danger is over with interest.
> The king should also carefully preserve the wealth that has been
collected. There is great trouble in the earning and a four-fold difficulty
in the maintenance (of wealth). It is the earner who gets pain when the
accumulated wealth is destroyed. Even wives and children do not feel that,
so how could others? There is no greater fool than the man who knows how to
earn, but not to maintain what has been earned. Vain is his exertion in
earning.
> One should keep his wealth like a miser & give away at crisis time,
liberally; otherwise, he displays his foolishness in the matter of spending
his own wealth. One should try to understand the real nature of goods; the
king should keep the jewels after having them tested by experts, as well as
by himself. There should be a high price, low price and middling price in
the valuation of all things. Sulka or Duty is the king’s share received
from buyer and seller. The regions of Sulka or Duty are marketplaces,
street, and mines. Duties are to be levied on goods only once. The king
should receive the thirty-second portion from the seller or buyer.
> The twentieth or sixteenth part, as the duty, is not a drawback on the
price. The king should not realize duty from the seller when he makes a loss.
He should receive it from the buyer after seeing that he is a gainer. If
the seller is at a loss, duty is to be realized from the buyer. Having
ascertained the amount of produce from the measured plots of land, whether
great, middling, or small, the king should desire revenue and then
apportion it among them
. > The king should receive rent from the peasant reasonably. It is to
be realized in the fashion of the weaver of the garland, not like a coal
merchant. A coal merchant sets fire to the woods to make charcoal and,
thus, destroys the whole property. But the weaver of garlands plucks from
the only trees those flowers that are full blown and preserves the rest, as
well as trees, for future use. That agriculture is successful which yields
a profit twice the expenditure (including government demand) after duty
considering the variation in actual produce, e.g. great, middling or small.
The king should realize one-third, one-fourth, or one half comes from the
places which are irrigated by tanks, canals and wells, and by rains and by
rivers, respectively. Where rivers are irrigators, the cultivation is
certain. Hence it may be taken as government revenue. Where rain is a
source of moisture, agriculture is precarious and uncertain. Hence the
demand of the state is to be very small. But where the tanks and artificial
water supplies are the irrigators, cultivation is very difficult and
expensive. Hence the government demand should be midway between the other
two cases. He should have one-sixth from barren and rocky soils. If the
king gets one-hundred silver karas from the cultivator, he should give back
to him twenty karas[37].
> The king should realize from minerals at the following rates: half
of gold, one-third of silver, one-fourth of copper, one-sixth of zinc and
iron and half of glass and lead, after the expenses have been met. He
should realize one-third, one-fifth, one-seventh, one-tenth, or
one-twentieth from the collectors of grasses and woods etc. He should have
one-eighth of the increase of goats, sheep, cows, buffaloes, and horses,
and one-sixteenth of the milk of she-buffaloes, she-goats and female sheep.
The king should make the artists and artisans work (for him), one day in
the fortnight. If the people undertake new industries or cultivate new
lands and dig tanks, canals, wells etc., for their good, the king should
not demand anything of them until they realize profit twice the
expenditure. That is, they should have remissions and suspensions of
revenue for periods. This is how wastelands are to be improved and new
enterprises encouraged.
> The king should promptly realize the land revenues, wages, duties,
interest, bribes, and rents. The king should give to each cultivator the
deed of rent having his own mark (seal). Having determined the land revenue
of the village, the king should receive it from one rich man in advance, or
as a guarantee (for the payment); or the king should appoint an officer
called ‘Gramapas’ by paying one-sixteenth, one-twelfth, one-eighth or
one-sixth of his own receipt. Having divided the whole land into several
proprietorships, the king should collect the revenue from and through the
man who is responsible for the total dues of the village. Though
Shukra-Nitisara does not specify any structural arrangements of revenue
collection, yet it lays down the principles of taxation. The taxation
prescribed in Shukra-nitisara is traditional but humane, generous, and
compassionate.
f) FISCAL MANAGEMENT- METHODS PRESCRIBED IN ‘ARTHASHASTRA’
The Arthashastra is an ancient Indian treatise on governance,
statecraft, diplomacy, financial policy, military strategy and duties of
king etc. it was presumably written and edited between the 3rd century BCE
and the 3rd century CE by Chanakya who is also addressed as Kauṭilya and
Vishnu Gupta. Till 12th Century, Rulers followed The Arthashastra.
Thereafter, it somehow was lost by disuse and was rediscovered in 1905 by
R. Shamasastry of Mysore State, who published it in 1909 followed
by its English translation[39] in 1915. Chanakya assisted Chandragupta in
his rise to power, who founded the Mauryan empire. Chanakya remained as
chief advisor to Chandragupta and his son Bindusara. The title
Arthashastra implies it to be “the science of wealth”.
Kautilya writes- “The source of the livelihood of men is artha
(wealth); that is to say, the territory [and the inhabitants following
various professions] is the wealth [of a nation]. The science by which
territory is acquired and maintained is Arthashastra – the science of
wealth and welfare”. {15.1.1,2} The Arthashastra covers broader areas,
including nature of government, law, civil and criminal court systems,
ethics, economics, trade, theories on war, methods for selecting ministers,
diplomacy, nature of peace, duties and obligations of King etc.
--------------------------------------- END of PART 2
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