In Muqaddima, his philosophy of history, Ibn Khaldun points out that the tribesmen found it humiliating to pay taxes to the government. They believed that if they paid taxes, they would have to rely on the government to provide them protection from enemies and adversity. Since the tribesmen carried arms themselves and enjoyed independence, they were confident of defending themselves against enemies instead of paying taxes to purchase protection from the government.

On the other hand, the peasants and artisans who were the productive classes of the society expected protection from the rulers, warriors and bureaucrats. In return for the protection that they provided, the rulers demanded payment in the shape of taxes from the productive classes.

But when the rulers imposed heavy taxes on people, the taxed classes suffered as they faced poverty and misery. On the other hand, if the taxes were waived or reduced, people expressed happiness and gratitude. For example, when Akbar abolished jizya and pilgrimage taxes for his Hindu subjects, his popularity increased.

The system of taxation also brought radical and revolutionary changes in the structure of society. In 1215, the feudal lords in England forced King John to sign a peace treaty called the Magna Carta to regulate the customs and practices that had grown up around feudalism. The king could no longer impose taxes without the permission of the parliament and his powers were reduced while the authority and prestige of parliament was enhanced.

The rebellion of the Thirteen Colonies against the British government, one of the major causes of the American Revolution, can be taken as another example. One of the taxes that the British government levied was the stamp duty. Since the British were taxing the colonial population to raise revenue for their own purposes, the Americans claimed that their constitutional rights were violated, as only the colonial legislatures could levy taxes. Across the American colonies, opposition to the tax took the form of violence and intimidation and the slogan “No taxation without representation” was raised during the 1750s and 1760s. 

The main cause of the French revolution in 1789 was the discriminative system of taxation from which the nobles and the clergy were exempt, while the rest of the society paid different kinds of taxes. The revolution ended this discrimination and attempts were made to structure the society on the basis of equality.

Taxation without representation has spelled the doom of many a nation

In the subcontinent, the East India Company, after its victory in the Battle of Buxar in 1764, was awarded the right to collect revenue from Bengal and Bihar. As a trading body, the company maximised its profits through land tax as well as trade tariffs levied in Bengal. As lands came under the company control, the land tax was typically raised five fold of what it had been. In the first years of the rule of the British East India Company, the total land tax income was doubled and most of this revenue flowed out of the country, making the most prosperous Mughal province barren and deserted. People experienced hardships as a result of continuous famine. Once the company became a supreme power, it introduced three types of revenue systems.

The Permanent Settlement in Bengal was an agreement between the East India Company and Bengali landlords, according to which the landlords were required to pay a fixed amount of revenue called Jama bandi in which the village community collectively paid the revenue. Another system was the Ryottwari in which the peasants paid the revenue individually to the government. The burden of taxes on the common man created unrest and anger and in 1957, the War of Independence ensued which was crushed by the East India Company and the British rule was restored.

In 1860, the British Government of India introduced the income tax, the main objective of which was to compensate for the expenses which the company incurred during the war of 1857. Dadabhai Nauroji, R.C. Dutta and Rajani Palme Dutta have written in great detail about the wealth pilfered by the British, from India to England.

Recently, two American professors, Daron Acemoglu and James Robinson have published a book entitled Why Nations Failed, in which they have presented a survey of the history of many Asian and African nations and traced their political and economic failure. According to them, extractive and inclusive institutions play an important role in the success or failure of nations.

If the ruling classes of a nation extract heavily from the people in the form of taxes, it causes crises, unrest and anarchy in the society. On the other hand, if people are represented in state institutions and allowed to look after their affairs in a democratic way, crises in the society could be controlled and prosperity and peace would be achieved.

In Pakistan, the ruling classes have adopted the policy of extracting taxes from people directly and indirectly. The revenue is typically not spent on public welfare such as education, health etc but wasted on buildings for the ruling classes and on providing them with privileges and facilities. The result is obvious; there is crisis after crisis and people suffer without any compensation or relief from the government.

The role of the people in the democratic institutions is nil. People are victims of the politicians’ whims who exploit them through false promises for a better future.

Whenever there is a struggle for democracy against dictatorship, it is the politicians belonging to the elite classes who are rewarded without sacrificing anything instead. In the end, the public is left with feelings of disappointment and frustration that the government has failed to provide a solution for the problems of common people.

Published in Dawn, Sunday Magazine, March 22nd , 2015

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