Around the fourth century BCE, Chanakya, in his treatise on governance, the Arthashastra notably said, ‘Praja sukhe sukham rajya, prajanam tu hite hitam’, meaning, “In the happiness of his subjects lies the king’s happiness, in their welfare his welfare”. Accordingly, he advocated the ‘Honeybee Principle of Fairness’, that taxes should be extracted with as little pain as possible to the subjects, similar to how a bee collects nectar from flowers without hurting them to make honey for the collective welfare of the hive.
From what I could gather, Chanakya advocated some very modern points on taxation. For one, I read that he favoured a system based on the capacity to pay, similar to modern progressive taxation. He wanted taxes collected at set times with clear rates to avoid confusion or extortion. Nor, said he, should taxes stifle economic incentives. He suggested tax holidays for low-income farmers and exemptions for at least two years for new land brought under cultivation.
While recommending that taxes should be fair, he also recognised the need for a strong treasury. Since ancient times, one-sixth of produce or income has been considered a fair and standard rate for bhaga, ‘the king’s share’ or the state treasury.
You find this rate mentioned in the Markandeya Purana, too, said to date back to 250 CE, in a story about King Uttama. A man’s wife has been spirited away overnight, and he comes to the king to have her found and rescued. But the king says, “You have no precise information about who took her away and where. Why should I exert myself fruitlessly by chasing in all directions?”
To which the man says pointedly in front of the assembled court, “O Lord of the Earth, you take a sixth of our produce as your due, and we expect justice from you.”
Abashed, the king gets up a stout hunting party and succeeds in finding the man’s wife.
Besides recommending a fair and doable general rate of taxation, Chanakya also advocated higher taxes on luxury items and lower taxes on essential goods. This seems such a contemporary notion that it was very interesting to read that it was advised as far back as the Mauryan Empire in India.
Chanakya had morally upright views on how the state should use revenue. He said that revenue should not be wasted but used for the development of the state and the good of the people. So, no vanity projects like extravagant personal memorials for rulers. Instead, revenue should be spent on infrastructure, defence and public welfare. He pointed out that not heavy taxation but a prosperous economy would fill the treasury, as a growing economy would naturally increase its tax base. He recommended strict vigilance over tax collectors to prevent corruption. He also warned against excessive taxes that would lead to avoidance and evasion or undermine people's economic motivation.
He concluded that a ruler should not collect taxes from those unable to pay, and that the state must commit, as a principle of good governance, to protect the property and livelihoods of its citizens.
The exemplary King Vikramaditya, generally dated to 57 BCE, apparently followed the standard tax of one-sixth of the produce. So, it seems, did the Gupta Empire from the early fourth to the mid-sixth centuries CE.
Inscriptions on temple walls and copper plates circa 850-1279 CE documented Chola tax records, including Kadamai (land tax, usually one-sixth of produce, which word now means ‘duty’ in everyday speech), Manradi (house tax), Sungam (tolls, called Chungi in the North) and Sulka (market taxes, Mandi shulk in the North).
Adi Shankara, in the eighth century, saw money as Goddess Lakshmi, as divine energy to be used for good deeds. He advised only against greed and miserliness, urging a life of moderate consumption and charity to the needy to maintain social balance. Legendary philanthropists who gave open-handedly, sometimes at self-harming cost, are culturally celebrated as daanveer, the ‘great givers’, like Raja Harishchandra, King Janaka, Shibi Raja and Karna. A householder in the old days was expected to keep a share of his income for religious duties, including charity, a share to feed guests and travellers (atithi devo bhava), a share to fulfil his role in larger family events, a share to support his own family, and a share to pay his taxes. This all-bases-covered plan drew from Purushartha, the four goals of life—Kama, Artha, Dharma and Moksha. Love, livelihood, right conduct, and liberation from the cycle of birth and death.
But why not go all the way back to the OG or ‘original gangster’, the popular social media compliment for a trailblazer, a respected, authentic trend-setter? To the person pre-dating Chanakya and all others? In the Mahabharata, it is Veda Vyasa himself who has Grandsire Bhishma, as he awaits death, advise Yudhishthira on how to govern well. Among other things, Bhishma says that taxation should be limited to the optimal rate of one-sixth of a person's income. Taxes should be collected without hurting people, like how bees gather nectar without destroying the flower. Taxes should be increased gradually, not abruptly, and in tune with the needs of the times. The state must protect tax-paying traders and agriculturalists, who are essential to the economy. Officials should be held strictly accountable. Bhishma emphasises that ‘over-taxation is counterproductive, like milking a cow too much, which kills the source of revenue’, that the purpose of collecting revenue is to use it for public welfare, defence and maintaining Dharma. Budget thoughts, anyone?
Renuka Narayanan | FAITHLINE | Senior journalist
(Views are personal)
(shebaba09@gmail.com)