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The Political Institutions and Theories of the Hindus: A Study in Comparative Politics c15.s3: Section 7. Taxes (Bali) as Wages and Prices

The Political Institutions and Theories of the Hindus: A Study in Comparative Politics c15.s3

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Section 7. Taxes (Bali) as Wages and Prices

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The right of the *prakriti* to revolt is essentially derived from the conception of *samaya* or compact, and this again is integrally connected with the theory of *koṣa* or public finance.

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On election, according to the *Mahâbhârata*,¹ the ruler makes a *pratijñâ*, vow or oath that he will protect the people, and the people reciprocate by promising to help him with the “root of the army”,² *i. e.* the “sinews of war” or *les nerfs de la république*. Kingship is by very nature a public office, and the masters of the king are the people who have the power of the purse. From the standpoint of the sovereign, then, as Śukra makes it clear, the revenues are but the wages for his labor, and from the standpoint of the people they are the prices offered for the service of protection.³

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¹ *Śânti*, Ch. LIX, 106—107; Ch. LXVII, 18, 24—28. Passages bearing on this subject may be seen in Kumaraswamy's “Hindu Theories of State and Social Compact” in the *Hindustan Review*, May-June, 1918.

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² Śukra, IV, ii, 28.

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³ *Supra*, p. 176.

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Taxation, according to this theory, is the “cash nexus” binding the king and the people in the *râjya*. It represents in reality the material basis of the contract between two parties who have an eye to the equalization between compensation and the benefit rendered. The right to levy a tax is dependent on the duty of protecting the people. Should, however, the taxes be ever so unjust in the realization or in the disbursement, the “discontent of the people would destroy the king with his whole family”.⁴ The right of resistance is a natural weapon of the people in Śukra's theory of finance. Recourse is had to it as the ruler ceases to discharge his functions according to the terms of the compact.

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⁴ Śukra IV, ii, 49.

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For normal times, however, i. e. as long as the people are paying the piper and the piper is willing to play the tune called for, Kâmandaka and other Hindu theorists have made provision for a considerable amount of revenue. It is not a slight Theocritean burden of taxation that the *nîti-śâstras* have in view, for the state conceived by them is not a primitive polity with functions of an idyllic character. Manifold are the services, as we have seen, rendered by the state in Hindu theory;

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the revenues (*bali*, *bhâga* or *kara*) i. e. the prices or wages therefore are necessarily varied and considerable.¹

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¹ *Supra*, pp. 172—173, *cf*. Kâmandaka’s “eightfold” sources of public income (V, 78—79), and list of appropriations (XIII, 31—32).

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Manu² and Śukra³ recommend a levy on almost every taxable resource of the people. Indirect taxes on commodities are to be paid by traders. No sale is to be left unassessed, from cattle and gold to fruits and flowers. Land of course contributes its quota. The right of preemption is also to be enforced. One day’s service per mensem and per fortnight the state is allowed, by Manu⁴ and Śukra⁵ respectively, to exact from artists, craftsmen, menial workers and independent laborers.

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² VII, 127, 130, 131, 132.

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³ IV, ii, lines 212—258.

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⁴ VII, 138.

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⁵ IV, ii, 241.

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The only limit that the *Manu Samhitâ* knows is the absolute limit furnished by the sound economic doctrine, “as far as the market will bear.” It lays down the golden rule of realizing the maximum possible without inflicting the least annoyance. For the state that shears the sheep to the skin really kills the goose that lays the egg. In Manu’s language, “excessive imposts” would lead but to the “destruction of one’s own roots.”⁶ We are told indeed that the levy is be *alpâlpa*, i. e. in small quantities. But the camouflage of these alleged negligible doses can not impose on anybody, for the theorist takes care to point out that the people are to be sucked dry in the manner in which “leeches, calves and bees” help themselves upon their food.⁷ The process of steady and patient although slow and imperceptible drain is thus suggested. Statesmen are in short to be guided by the principle analgous to the one well known in the investors’ world, viz. that of “small rates” but “quick returns.”

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⁶ VII, 139.

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⁷ VII, 129.

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We find this hint of Manu’s fully elucidated in the *Arthaśâstra*. “Just as fruits are gathered from a garden,” says Kautilya,⁸ “as often as they become ripe, so revenue shall be collected as often as it becomes ripe.” This principle of continuous levy might be indiscriminately observed in a suicidal fashion. Hence the sober advice that the collection of revenues or fruits must not be allowed “while they are unripe,” for there is a danger lest their “source be injured” to the immense peril of the state. In the *Mahâbhârata’s* phraseology the *râṣtra* must not be “over-milked.”⁹

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⁸ Bk. V, Ch. ii, *Ind. Ant*. 1909, p. 264.

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⁹ *Sânti* LXXXVII, 20—22.

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The fear of injuring the source or killing the goose, or “spoiling the market”, as economists would say, haunts likewise the financiers of the Śukra school. The cultivator is to pay the dues to the state but the state must take care that he “be not destroyed.”¹ Land revenue is to be realized, as we read in the *Śukra-nîti*, in the fashion of the “weaver of garlands” and not of that of the charcoal merchant.² The latter sets fire to the woods to make charcoal and thus destroys the whole property. But the weaver of garlands plucks from the trees only such flowers as are full blown and preserves the rest as well as the trees for future use. Fortified with this much discretion the finance minister is to test the “faculty” or taxability of the people at every conceivable point. He is to “enjoy fruits everywhere” and “collect funds by hook or by crook.”³

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¹ IV, ii, 222. The complete account of Śukra's theory of public finance is to be found in *Pos. Back*, Vol. II, pp. 111—126.

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² IV, ii, 35—36, 223.

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³ IV, ii, 3, 259.

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No resource is then left untapped in Hindu fiscal thought, and “taxes, more taxes, still more taxes” appears to be the slogan popularized by the *Kâmandakî-nîti*.⁴ But the theory of such a heavy assessment is redeemed by the postulate that the people are normally in a position to bear the burden and maintain the “root of the army.” The philosophers of finance have therefore seen to it that the state promotes by all means the economic prosperity of its members.⁵

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⁴ V, 87.

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⁵ *Ibid* IV, ii, 3—6, 15—16, 29—30; *Sabhâ*, V, 76—79; Kâmandaka, V, 80.

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The *Sabhâ-parva* of the *Mahâbhârata* is explicit about the development of agriculture by the government to such an extent as to render it independent of the monsoons. Kâmandaka wants the state to patronize the commercial classes. The people's interests are looked after in Śukra's suggestion that if “new industries be undertaken or new lands brought under cultivation” no taxes are to be demanded until the new ventures “have realized profit twice the expenditure.”⁶ Such remissions of taxes or suspensions of revenue for certain periods are however not to be permitted by Kautilya on *doctrinaire* grounds.⁷ The difficulties in the improvement effected by the peasants are to be carefully considered in fixing the rate of remission. Likewise is the wealth of the land sought to be augmented by protective duties, e. g. on foreign salts and wines.⁸ Kautilya would also recommend legislation against “profiteering.”⁸ Consumers may thereby be protected from ruinously high profits and a general level of moderate prices would encourage saving. But on the other hand Śukra does not want to be unjust to the seller.¹ The excise on sales is not to be realized if the trader receives what is less than or just equal to the cost.

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⁶ IV, ii, 242—244.

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⁷ *Supra*, p. 124.

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⁸ *Supra*, pp. 124—125.

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¹ IV, ii, 218.

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Development of national resources being thus provided for in diverse ways, the Hindu theory of taxation automatically finds its own safety-valve. This principle of replenishment or recuperation is clearly stated by Śukra in the dictum that the "collector of taxes is to be like the gardener who plucks flowers and fruits after having duly nourished the trees with care."² Kâmandaka's idea is similar.

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² *Ibid* II, 345—346; *Kâmandaki*, V, 84.

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The financiers' solicitude for the people's material prosperity is brought out in bold relief by the special arrangements they seek to devise for "hard times" in state housekeeping. Emergency finance is treated by them as something distinct from normal finance. Fines, land revenues, excise, etc., must not be enhaced, says Śukra,³ in normal times. Nor should holy places, religious establishments or properties consecrated to the gods be assessed as sources of public income under peace conditions. Extraordinary duties and fines may be levied when the state is preparing to maintain an army on war-footing.⁴ While the community at large is to be drawn upon for war-finance by regular enhancements of the rates, the pressure of the state is to be borne more distinctively by the rich. And the doctrine is laid down that loans are to be floated by the government to which the wealthy classes should be invited to contribute. The "public debt" is to be redeemed, however, with interest when the national danger is over.⁵

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³ ii, 17—18.

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⁴ 19—20.

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⁵ 1—22.

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